You are a homebuyer choosing between two identical properties. The first property is located in Los Angeles County. Your local mortgage bank is offering a 30-year FRM for $822,375 at 3.2% interest for a property located in Los Angeles County.

1. What mortgage payments is your competitor receiving on this loan?

2. Why did the mortgage bank offer a loan amount of $822,375?

3. If the property were located in San Bernardino County, what loan amount would you expect them to offer?

Based on your answer to question #3, compare the loans in Los Angeles County and San Bernardino County if the properties cost $1 million.

4. What is the down payment for each loan? What is the LTV for each loan?

5. Based on this information, do you expect the lender to offer a higher or lower interest rate for the loan in San Bernardino County?

Youre not happy with the San Bernardino County loan. You want to get a loan for that property that has the same down payment as the loan in Los Angeles County. So you go to a bank, and they offer you a 30-year FRM at 3.9% interest.

6. Why is the interest rate higher?

7. Why is the bank offering this loan, but the mortgage bank is not?

8. What is the mortgage payment for this loan?

on excel.