Reference no: EM133114357
Use the following information in question 1 for next 7 questions after.
1) (Use this information for following 7 questions) Assume you have decided to buy a new house in Malibu that costs $822,000 (a bargain for that community). You want to get a conforming mortgage. Assuming no points, how much cash do you need to bring to the closing? Also, assume there are no other fees.
2) How much is the mortgage for?
3) Staying with the same mortgage situation, your mortgage broker has offered you a couple of differing mortgage products. For now, let's work with mortgage A: a 30 year fixed rate mortgage with an 8% rate and no points. What is the monthly payment?
4) For this fixed-rate mortgage with no-point (mortgage A), what is the effective yield?
5) Now, let's think about mortgage B, a 30-year adjustable-rate mortgage with no points. Like the prior mortgage, it is a conforming mortgage. The interest rate offered is 5% and it resets after year 2 at 100 basis points over the 3-year treasury. What is the initial monthly payment?
6) How much do you owe on this mortgage on the two-year anniversary?
7) On the second anniversary, the 3-year treasury is trading at 6%. What is your new mortgage interest rate?
8) Lastly, what is your new payment after the interest rate resets?
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: 1) (Use this information for following 7 questions) Assume you have decided to buy a new house in Malibu that costs $822,000 (a bargain for that community). You
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