Comprehensivc Rcview Problem: A mortgage loan in th~ amount of $. I O?,OOO is made :II 12 percent interest for 20 years. Payments arc to be monthly III each part ollhlS problem.

tl. What will monthly payments be if:

(I) The loan is fully amortizing?

(2) It is partially amortizing and a balloon payment of $50,000 is scheduled at the end of year 20?

(3) It is a nonamorlizing, or " interest only," loan?

(4) II" is a negat ive amortizing loan and the loan balance will be S150,000 at the end of year 20?

b, \Vhat wi II the loan balance be at the end of year 5 under parts a ( I) through CJ (4)?

c. What would be the interest portion of the payment scheduled for payment at the end of month 61 for each case (I) thru (4) above?

d. Assume that the lender charges 3 points to close the loans in parts (I (I) through CJ (4). What would be the APR for each?

e, If the loan is prepaid at the end of year 5, what will be the effective rate of interest for each?
f Assume conditions in CJ ( 1) except that payments will be interest only for the first 3 years (36 months). If the loan is to fully amortize over rhe remaining 17 years. what must the monthly payments be rrol11 year 4 through year 20?
g. Refer to a (4) above, where the borrower and lender agree that the loan balance of S 150.000 will be paya ble at the end of year 20:
( 1) How much total interest will be paid from all payments? How much rotal amortization will be paid?
(2) What will be the loan balance at the end of year 3':'
(3) Ir the loan is repaid al the end of year 3. what will be the effective rate of interest?

(4) I f the lender charges 4 points to make th is loan. what will the effective rate of interest be if the loan is repaid at the end of year 3?AppendixLO1