6-9 PLEASE ANSWER ALL PARTS THANK YOU!!
Assume that a lender offers a 30 -year, $155,000 adjustable rate mortgage (ARM) with the following terms: Initial interest rate =7.5 percent Index = one-year Treasuries Payments reset each year Margin =2 percent Interest rate cap=1 percent annually; 3 percent lifetime Discount points =2 percent Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year (BOY) 2=7 percent: (BOY)3=8.5 percent; (BOY 4=9.5 percent: (BOY)5=11 percent. Required: a. Compute the payments and loan balances for the ARM for the five-year period. b. Compute the yleld for the ARM for the five-year period. Complete this question by entering your answers in the tabs below. Compute the payments and loan balances for the ARM for the five-year period. Note: Do not round intermediate calculations. Round "Payments" to 2 decimal places and "Loan Balance" to the nearest dollar amount. A floating rate mortgage loan is made for $110,000 for a 30-year period at an initial rate of 12 percent interest. However, the borrower and lender have negotiated a monthly payment of $880. Required: a. What will be the loan balance at the end of year t? b. If the interest rate increases to 13 percent at the end of year 2 , how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $880 ? Answer is not complete. Complete this question by entering your answers in the tabs below. If the interest rate increases to 13 percent at the end of year 2 , how much is the payment plus negative amortization in year 2 and year 5 if the payment remains at $880 ? Note: Do not round intermediate calculations. Round your final answers to 2 decimal places. A builder is offering $107,960 loans for his properties at 9 percent for 25 years. Monthly payments are based on current market rates of 9.5 percent and are to be fully amortized over 25 years. The property would normally sell for $120,000 without any special financing. Required: a. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. b. At what price should the builder sell the properties to earn, in effect, the market rate of interest on the loan if the property is resold after 10 years and the loan repaid? * Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. At what price should the bulider sell the properties to earn, in effect, the market rate of interest on the loan? Assume that the buyer would have the loan for the entire term of 25 years. (Do not round intermedlate calculations, Round your final answer to the nearest whole dollar amount.) A property is avoilable for sale that could normally be financed with a fully amortizing $83,000 loan at a 10 percent rate with monthly payments over a 25-year term. Payments would be $754.22 per month. The builder is offering buyers a mortgage that reduces the payments by 50 percent for the first year and 25 percent for the second year. After the second year, regular monthly payments of $754.22 would be made for the remainder of the loan term. Required: a. How much would you expect the bullder to have to glve the bank to buy down the payments as indicated? b. Would you recommend the property be purchased if it was selling for $5,000 more than similar properties that do not have the buydown available? Q Answer is complete but not entirely correct. Complete this question by entering your answers in the tabs below. How much would you expect the builder to have to give the bank to buy down the payments as indicated? (Do not round intermediate calculations. Round your final answer to 2 decimal places.)
