You are buying a home worth $200,000, and expect that you wi…
You are buying a home worth $200,000, and expect that you will own the home for five years. You will put 10% down on the property, and finance it over 30 years at a rate of 6%. Your bank is charging you three points on the loan, and also has a 2% early payment penalty. What is the effective interest rate on this loan over your five year holding period?
Read DetailsYou are choosing between two mortgages on a home worth $200,…
You are choosing between two mortgages on a home worth $200,000. The first is a FHA loan that will allow you to borrow 97% of the home’s value at a rate of 6%. Or you can pay 20% of the home’s value as a down payment ($40,000) and take out a loan for only $160,000 at 5.6%. What is the marginal interest rate on the extra amount borrowed if you take the FHA loan? The loans will last for 25 years of monthly payments with either option.
Read DetailsSix years ago, you took out a loan of 180,000 to finance the…
Six years ago, you took out a loan of 180,000 to finance the purchase of a home worth 220,000. The loan was 30 years of monthly payments, at an interest rate of 8%. With interest rates now at 5%, you just refinanced the full balance of your home for 20 years. What will be your new monthly payment?
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