Monthly payment that he can receive with this mortgage

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Reference no: EM131297592

Use the following information to answer all of the following:

Karon owns a home worth $245,000. Howard Mortgage is offering a reverse mortgage with a 15-year term, a maximum loan balance equal to 60 percent of the home’s current value and a 7.25 percent interest rate.

A. If Karon takes out no money at origination, what is the monthly payment that he can receive with this mortgage?

a. $1,341.91

b. $453.78

c. $756.31

d. $2,236.51

e. None of the above.

B. Suppose Karon decides to take out $40,000 at origination. What will Karon’s monthly annuity be in this case?

a. $88.64

b. $391.16

c. $1,121.45

d. $818.93

e. None of the above.

C. Suppose instead that Karon wants to as large a lump-sum payment as possible. What is the largest amount of money Karon can receive at origination?

a. $82,849.87

b. $724,503.23

c. $49,709.92

d. $434,701.94

e. None of the above.

Reference no: EM131297592

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