A home is available for sale that could normally be financed with fully amoruzing suam lean at a 10 percent rate with monthly payments ver a 25-your term Payments would be $726.96 per month. The builder is offering buyers a mortgage shat reduces the payments i 30 percent for the first year and 25 percent for the second year. After the second cor, rega monthly payments of $726.96 would be made for the cenon of the loan rem a How much would you expect the builder to have to give the bank te bus down the payments as indicated

b. Would you recommend the home be purchased if i wse be 55.000 more they similar homes that do not have the buy down available An appraise is looking for comparable sales and finds house that recently old fel She finds the buyer was able to assume the sollers tolly amortizing co tage hal moms payments based on a 7 percent interest rate. The aleree or the foam of de use of Sale was $140,000 with a renaming term of 15 years monthly payment the appmises determines that if as 140,000 toan was obtained on the same property, mo. hhayments the makes rate for a 15-year fully amortizing loan would face en 8 percons with nonos

a. Assume that the buyer expected to bene from the injures savagy on the aisumable loan for the entue loan term. What is the cash equivalent valne ofehouse?

b. How would your answer to part to benefit from interest savings for it five years change for assured fur the buyer and eatened to years because he would probably sell or refiance aos.AppendixLO1