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21. Comprehensive Review Problem: A mortgage loan in the amount of $100.000 is made at 12 percent interest for 20 years. Payments are to be

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21. Comprehensive Review Problem: A mortgage loan in the amount of $100.000 is made at 12 percent interest for 20 years. Payments are to be monthly in each part of this problem. a. What will monthly payments be if (1) The loan is fully amortizing? (2) It is partially amortizing and a balloon payment of $50,000 is scheduled at the end of year 207 (3) It is a nonamortizing, or "interest-only" loan? (4) It is a negative amortizing loan and the loan balance will be $150,000 at the end of year 20? b. What will the loan balance be at the end of year 5 under parts a (1) through a (4)? c. What would be the interest portion of the payment scheduled for payment at the end of month 61 for each case (1) through (4) above? d. Assume that the lender charges 3 points to close the loans in parts a (1) through a (4). What would be the APR for each? e. Assuming that 3 points are paid at closing and the loan is prepaid at the end of year 5, what will be the effective rate of interest for each loan in parts a (1) through a (4) ? f. Assume conditions in a (1) except that payments will be "interest only" for the first three years (36 months). If the loan is to fully amortize over the remaining 17 years, what must the monthly payments be from year 4 through year 20? 8. Refer to a (4) above, where the borrower and lender agree that the loan balance of $150,000 will be payable at the end of year 20: (1) How much total interest will be paid from all payments? How much total amortization will be paid? (2) What will be the loan balance at the end of year 3? (3) If the loan is repaid at the end of year 3. what will be the effective rate of interest? (4) If the lender charges 4 points to make this loan, what will the effective rate of interest be if the loan is repaid at the end of year 3

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