Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. you plan to purchase a house for $195,000 using a

You plan to purchase a house for $195,000 using a 20-year mortgage obtained from your...

60.1K

Verified Solution

Question

Accounting

image
You plan to purchase a house for $195,000 using a 20-year mortgage obtained from your local bank. You will make a down payment of 20 percent of the purchase price. You will not pay off the mortgage early. Your bank offers you the following two options: Option 1: Mortgage rate of 5.35 percent and 1 discount point. Option 2: Mortgage rate of 5.10 percent and 2 discount points. Calculate the number of months you need to keep the mortgage loan such that you are indifferent between the two options, taking into consideration of TVM in your analysis. b. Consider a $250,000 30-year Option ARM (i.e., Pick-n-Pay mortgage) that offers a minimum payment option with an interest rate of 1% for the first year. The prevailing interest rate on a comparable 30 -year mortgage loan is 3%. Calculate the outstanding loan balance for EACH of the first THREE months of this Option ARM

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

1) Present the analysis of variance (ANOVA) table in standard format. 2) Report the result of the...

Statistics
Q

Consider the following reaction:  2 A + 3 B2 ⇌ A2B6 The initial concentrations of...

Chemistry
Q

One speaker A is located in origin and another speaker B is located at point (3.0), the...

Physics
Q

DTMF Home Automation System This project is about controlling of home appliances using DTMF (Dual Tone Multi...

Electrical Engineering
Q

Chapter 21: Operational Finance and Budgeting 1. ___ is the primary revenue source for HMOs. A. Investments B. Equity financing C. Withholds D. Premium revenue 2. ___ rating entails the application of a standard...

General Management
Q

A radioactive source in the form of a metal sphere of diameter 10 m emits...

Physics
Q

In the two distinct acute triangles ABC and DEF, LB = LE. Triangles ABC and...

Geometry
Q

Suppose a university accepts 70 of the students who apply The probability of being accepted...

Statistics
Q

6 km d 8 200 8 6 0 20 8 0 20 8 36 20...

Calculus
Q

Use log 4 1 386 and or log 9 2 197 to find log 36...

Calculus
Q

As you can see I have the answers to this question, but...

Accounting
Q

Problem 3 Intro The current value of the S&P 500 stock index is 2.741 and...

Finance