Reference no: EM132935704
A mortgage broker is arranging a mortgage loan with a face value of $300,000 at a contract rate of 5.75% per annum, compounded quarterly. The loan is amortized over 20 years, has a 3-year term, and monthly payments, rounded up to the next higher dollar. The borrower is to receive less than $300,000 as a result of a broker's fee of $15,500, a survey fee of $2,500, an appraisal fee of $750, and legal fees of $2,500, all of which are to be deducted from the face amount of $300,000.
Problem 1: Calculate the funds advanced to the borrower.
(1) $284,500
(2) $288,600
(3) $269,700
(4) $278,750
Problem 2: Calculate the monthly payments and outstanding balance owing at the end of the term.
(1) $1,982; $267,862.33
(2) $2,102; $273,701.60
(3) $2,126; $257,973.45
(4) $2,032; $245,038.96
Problem 3: Calculate the cost of funds advanced to the borrower, expressed as a nominal rate with quarterly compounding (j4).
(1) 9.64449%
(2) 6.10992%
(3) 8.577582%
(4) 7.57675%