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What is the effective cost of this loan

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Suppose you borrow $100,000 PLAM (Price Level Adjusted Mortgage) for 30 years, monthly payments with $3,000 origination cost.  The mortgage rate is 5% with annual outstanding balance adjustments based on the following home price information:

Year

Home Price

1

4%

2

-5%

3-30

0

What is the effective cost of this loan if you holding the loan for only 1 year?

Reference no: EM133072620

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