Calculate the apr for federal truth in lending purposes

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Reference no: EM131327168

A loan with the following terms is being made: Fixed rate, constant monthly payment. Closing date February 9th. 9% interest rate. Prepaid interest due at closing. $70,000 mortgage loan amount. $1,500 loan discount points to be paid by the buyer/borrower to the lender. 25-year term, monthly payments, fully amortizing.

a. Calculate the APR for federal truth-in-lending purposes.

b. Do you think that the APR calculated in (a) reflects the likely return that the lender will receive over the term of the loan? List specific reasons that the lender's actual return might be different from the APR.

Reference no: EM131327168

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