Effective interest rate or yield over the borrower expected

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Reference no: EM131320452

1. If a mortgage has a "Due-on-Sale" clause, the borrower would not be able to:

Take out a home equity loan.

Take out a car loan.

Pay the loan off prior to selling the house.

Allow a subsequent buyer of the property to assume (take over) the mortgage.

2. Consider a 20-year (monthly-payment), 8%, $80,000 mortgage with 2 points prepaid interest up front. What is the "effective interest rate" or yield over the borrower’s expected holding period if the borrower expects to hold the loan for 12 years?

8.00%

8.25%

8.31%

8.56%

Reference no: EM131320452

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