What is the return to the bank on loans

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1. You earn $115,000 per year and have applied for a 30-year mortgage with monthly payments of $3000. Property taxes on the house are expected to be $3200 per year. If your bank requires a gross debt service ratio of no more than 30 percent, will you be able to obtain the mortgage? Show your calculation..

2. A bank offers one-year loans with a stated rate of 6.5 percent, charges a 1/2 percent loan origination fee, imposes a 10 percent compensating balance requirement, and has a 10 percent reserve requirement. What is the return to the bank on these loans? Show your calculation.

Reference no: EM131571869

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