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Suppose my friend April is considering to refinance her mortgage. She bought her house 60 months ago at $127,000. She paid cash to cover the 5% as her down payment plus all required closing costs (closing costs include application fee, appraisal fee, loan origination fees and other costs, usually about 3%-5% of the loan amount). Since she has a decent credit history and relatively stable income, her mortgage rate was 5.25% for 30 years. Since her down payment was less than 20%, she had to pay monthly mortgage insurance premium which is $60 per month (premiums are automatically terminated when the loan balance falls to 80%).Recently, mortgage rate has been dropping and she is considering to refinance her mortgage. She talked with a mortgage banker and got the following information: a) 3.75% 30 year conventional loan with out of pocket closing costs of $1,800 b) 3.5% 30 year conventional loan with out of pocket closing costs of $3000 c) 3.25% 30 year conventional loan with out of pocket closing costs of $4,000 Based on the recent appraisal, her house value has gone up to $151,000. Please advise her on the following: 1.) Based on the information, please calculate her monthly mortgage payment on the original loan. Please show your process. 2.) Please use online resources to show her amortization table. How much principle has she paid off so far? How much interest has she paid over the past 60 payments? 3.) How much does she need to refinance now? Hint: You need to find her loan balance. 4.) Based on the new appraisal value, what is her LTV (loan-to-value) ration now? 5.) Does she still need to pay the mortgage insurance premium after refinancing? Why? 6.) How much should her monthly payment be under each option (a, b, and c)? Show your calculations. 7.) Would you suggest her to do the refinancing or not? Why? Notice that monthly payment is reduced but she need to make 360 payments plus closing costs under the new mortgage versus 300 payments in the old mortgage. 8.) Which option would you suggest her to take? What factors would affect her choice and how?
Booher Book Stores has a beta of 0.6. The yield on a 3-month T-bill is 3% and the yield on a 10-year T-bond is 6.5%. The market risk premium is 4%. What is the estimated cost of common equity using the CAPM?
The landlord carries contents insurance that should cover the damage to the furnishings, equipment and to the computers, and the insurance company adjuster will come tomorrow to assess the furnishings and equipment damage, however, your boss is sure ..
If the discounted sales are revised according to the performance of the first year, when would it Wise to abandon the investment?
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The Trektronics store begins each week with 260 phasers in stock. This stock is depleted each week and reordered. The carrying cost per phaser is $27 per year and the fixed order cost is $54. What are the current total carrying costs?
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A circuit breaker generally returns excess property tax paid through:
Calculate the amount of the installment payments.
Write the Physical Security Policy section of the Information Security Policy of the bank. Include the following: Security of the facilities: Physical entry controls, Security offices, rooms, and facilities Isolated delivery and loading areas Securit..
Steady As She Goes, Inc., will pay a year-end dividend of $3.70 per share. Investors expect the dividend to grow at a rate of 5% indefinitely. If the stock currently sells for $37 per share, what is the expected rate of return on the stock?
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