Consider a borrower that is approved for a standard 30-year, fully amortizing mortgage with an original balance of $270,000 and a note rate of 4.25%. (Standard refers to a fixed-rate mortgage contract with level payments)

1. If the borrower purchases a house that is appraised for $346,154, what is the borrowers loan-to-value ratio (LTV)? How does the bank use this number to decide whether to accept or deny the loan?
2. Assume the borrower does not prepay or default on the loan. Write down part of the amortization table, limiting attention to months 1, 2, 359, and 360 (where month 1 indicates the end of month 1 when the first payment is made). Your amortization schedule should include four columns: (1) Month, (2) Interest Payment, (3) Principal Payment, and (4) Remaining Mortgage Balance (immediately after the payment for that month is made).