A reverse annuity mortgage is made with a balance

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Reference no: EM131327332

A reverse annuity mortgage is made with a balance not to exceed $300,000 on a property now valued at $700,000. The loan calls for monthly payments to be made to the borrower for 120 months at an interest rate of 11 percent.

a. What will the monthly payments be?

b. What will be the RAM balance at the end of year 3?

c. Assume that the borrower must have monthly draws of $2,000 for the first 50 months of the loan. Remaining draws from months 51 to 120 must be determined so that the $300,000 maximum is not exceeded in month 120. What will draws by the borrower be during months 51 to 120?

Reference no: EM131327332

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