Protection of mortgage insurance

Assignment Help Finance Basics
Reference no: EM133060846

Suppose you have just purchased your first home for $300,000. At the time of purchase you could only afford to commit to a down-payment of $15,000. In order to make the loan, the lender requires you to obtain private mortgage insurance (PMI) on their behalf. Suppose over time you paid down the principal of the loan to $280,000 and at that point in time you can no longer make any mortgage payments (i.e., you default on the loan). If the lender were to foreclose on your property and sell it for $228,000, what would the lender's loss of principal be taking into consideration the protection of mortgage insurance? (Let's assume that the PMI in this case covers the top 30% of the loan).

Reference no: EM133060846

Questions Cloud

Compute the current break-even point in units : Compute the current break-even point in units, and compare it to the break-even point in units if Wildhorse's ideas are used
California criminal justice system and develop solutions : Explain the challenges facing California's criminal justice system and develop solutions
Compare the loan balance to be repaid : A FHA HECM reverse mortgage is only required to be repaid (1) when the borrower moves, or (2) when the borrower dies. Assume you take out a $300,000 reverse mor
Identify the types of special-purpose financial reporting : Questions - Identify the types of special-purpose financial reporting frameworks and the nature of the audit reports issued
Protection of mortgage insurance : Suppose you have just purchased your first home for $300,000. At the time of purchase you could only afford to commit to a down-payment of $15,000.
Journalize transaction to record the payment of sales tax : On July? 5, Gunther Company recorded sales of merchandise inventory on? account, $30,000. Journalize transaction to record the payment of sales tax
Define big data analytics : Define big data analytics and explain how big data analytics can help improve a firm's value i.e. increase the company's share price.
Difference between perpetual and periodic inventory system : What is the difference between perpetual and periodic inventory system? Journalize the following transactions under perpetual inventory system
Benchmark-the economics of federalism : Describe block grants, categorical grants, and unfunded mandates. How do they demonstrate fiscal federalism?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the cost of equity for abc

What is the cost of equity for ABC? What is it for XYZ?

  How would one find resonant frequency

A parallel resonant circuit consists of a 1 Mohm resistor, a 20 mH inductor, and a 5 microF capacitor. How would one find resonant frequency?

  Loan without a compensating balance

Your firm is seeking a 3-year, amortizing $300,000 loan with annual payments and your bank if offering you the choice between a $305,000 loan

  What is the optimal hedge for the firm

Also assume that the futures price remains at its current level of $.006912. Based on this expectation of the future spot rate, what is the optimal hedge.

  Canadian human resource course

What have you learned in Canadian human resource course?

  Assuming no market imperfections or tax effects exist what

stock splits and stock dividends red rocks corporation rrc currently has 250000 shares of stock outstanding that sell

  Compute the blackscholes-merton price of the call

The expirations were July 17, August 21, and October 16. The continuously compounded risk-free rates associated with the three expirations were 0.0503, 0.0535, and 0.0571, respectively. Unless otherwise indicated, assume the options are European.

  Capital structure and growth plans

Sustainable growth. A firm has decided that its optimal capital structure is 100 percent equity financed. It perceives its optimal dividend policy to be a 40 percent payout ratio.

  What is the amount of the monthly repayment

You promise to repay the loan in 24 monthly repayments commencing today. If the effective annual interest

  Calculate midlands corporate wacc be prepared to defend

1. how are mortensens estimates of midlands cost of capital used? how if at all should these anticipated uses

  What type of data can be examined using the chi-squared

a. What type of data can be examined using the Chi-Squared Te b. What is the only constraint in using Chi-Squared Tests?

  Initial fixed asset investment

A project will produce an operating cash flow of $14,600 a year for 8 years. The initial fixed asset investment in the project will be $48,900

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd