What is your payment for the initial interest-only period

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Reference no: EM131844564

1. To buy your dream home you use a 10/20 interest-only, fixed-rate mortgage. The loan has monthly payments and is for $110000 at 7.5 percent. The lender charges you two discount points.

a) what is your payment for the initial interest-only period?

b) what is your payment over the 20-year amortization period?

c) what is the APR on the loan?

d) what is the effective cost of the loan if it is repaid 6 years after the interest-only period?

2. You are 12 years into your fixed-rate mortgage, which is 7-year balloon/reset with monthly payments over a 30-year amortization. Your original amount was $90000 at an initial rate of 6 percent. At refinancing, the rate was reset to 8 percent. At closing, your financing costs were 3 percent.

a) what was your initial payment?

b) what is your payment after the reset

c) what is the APR of this loan?

d) what is the effective cost of the loan if you repay it today?

Reference no: EM131844564

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