Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Consider two physically identical properties A and B. Property A's current asking price is $570,000 and Property B's asking price is $522,497. Property A's current

Consider two physically identical properties A and B. Property A's current asking price is $570,000 and Property B's asking price is $522,497. Property A's current owner has a 25-year remaining maturity assumable mortgage of $473,100 at a fixed mortgage rate of 11.40%. Property B's current owner has a 25 year remaining maturity non-assumable mortgage of $473,100 at a fixed mortgage rate. The current market mortgage rate for 25-year maturity conventional (not assumable) mortgage is 13.15%. In either Case (A or B), the buyer would have the same amount $473,100 of 25-year fixed rate mortgage financing. The Buyer's Alternative Investment Return is 14.45%.

a) what is the cash equivalent value of property A's assumable mortgage?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Acquisition Finance

Authors: Tom Speechley

2nd Edition

1780436599, 978-1780436593

More Books

Students also viewed these Finance questions