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Major components in the mortgage interest rate

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Reference no: EM131950255

1. A borrower takes out a 30-year fully amortizing mortgage loan for $500,000 with an interest rate of 12% and monthly payments. What is the accrued interest amount as of the end of the first month? What is the effective annual rate of interest?

2. Which of the following is not one of the major components in the mortgage interest rate?

a. the real rate of interest

b. the Institutional risk premium

c. the prepayment risk premium

d. the inflation premium

Reference no: EM131950255

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