The following information applies to questions 3 5 You borrowed $250,000 in a fully amortizing 30 year fixed rate mortgage at an interest rate of 7 to buy your home 5 years ago You have lived in your home for 5 years and still have the original loan A lender has approached you with an offer to refinance at 6 There are 2 percent discount points and $1500 closing fees for the new loan (no prepayment penalty) You plan to live in the house another 10 years Compute effective cost of borrowing (in percent) of the new loan assuming the new loan is made for 25 years (note, if answer is 1 23 , write 1 23) 1 points QUESTION 4 You plan to live in the house another 5 years Compute effective cost of borrowing (in percent) of the new loan assuming the new loan is made for 25 years (note, if answer is 1 23 , write 1 23) 1 points QUESTION 5 You plan to live in the house another 3 years Compute effective cost of borrowing (in percent) of the new loan assuming the new loan is made for 25 years (note, if answer is 1 23 , write 1 23) 1 points QUESTION 6 The following information applies to questions 6 8 You bought a house at $312,500 and borrowed $250,000 in a fully amortizing 30 year fixed rate mortgage at an interest rate of 7 to buy your home 5 years ago You have lived in your home for 5 years and still have the original loan How much could you borrow against the value of the home, assuming housing prices increased 2 per year for the last 5 years and the bank would again allow you to borrow 80 of the value of the home 1 points QUESTION 7 A lender has approached you with an offer to cash out refinance at 6 4 with 80 LTV There are 2 percent discount points and $2000 closing fees for the new loan (no prepayment penalty) What amount could a borrower cash out due to refinancing 1 points QUESTION 8 What is return of the cash out refinance (in percent) assuming the new loan is made for 25 years and you hold the new loan until maturity (Note I am NOT asking the effective cost of borrowing) 1 points Click Save and Submit to save and submit Click Save All Answers to save all answers

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[The following information applies to questions 3-5] You borrowed $250,000 in a fully amortizing 30 year fixed-rate mortgage at an interest rate of 7% to

[The following information applies to questions 3-5]You borrowed $250,000 in a fully amortizing 30 year fixed-rate mortgage at an interest rate of 7% to buy your home 5 years ago. You have lived in your home for 5 years and still have the original loan. A lender has approached you with an offer to refinance at 6%. There are 2 percent discount points and $1500 closing fees for the new loan (no prepayment penalty).
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You plan to live in the house another 10 years. Compute effective cost of borrowing (in percent) of the new loan assuming the new loan is made for 25 years. (note, if answer is 1.23%, write 1.23)
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1 points

QUESTION 4

You plan to live in the house another 5 years. Compute effective cost of borrowing (in percent) of the new loan assuming the new loan is made for 25 years.

(note, if answer is 1.23%, write 1.23)

1 points

QUESTION 5

You plan to live in the house another 3 years. Compute effective cost of borrowing (in percent) of the new loan assuming the new loan is made for 25 years. (note, if answer is 1.23%, write 1.23)

1 points

QUESTION 6

[The following information applies to questions 6-8] You bought a house at $312,500 and borrowed $250,000 in a fully amortizing 30 year fixed-rate mortgage at an interest rate of 7% to buy your home 5 years ago. You have lived in your home for 5 years and still have the original loan.

How much could you borrow against the value of the home, assuming housing prices increased 2% per year for the last 5 years and the bank would again allow you to borrow 80% of the value of the home?

1 points

QUESTION 7

A lender has approached you with an offer to cash-out refinance at 6.4% with 80% LTV. There are 2 percent discount points and $2000 closing fees for the new loan (no prepayment penalty). What amount could a borrower cash out due to refinancing?

1 points

QUESTION 8

What is return of the cash-out refinance (in percent) assuming the new loan is made for 25 years and you hold the new loan until maturity? (Note: I am NOT asking the effective cost of borrowing)

1 points

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