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    Finance questions: calculating amount qualified to borrow, monthly payment, total interest paid, cost different between adjustable-rate and fixed-rate loans and more...

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    Can someone please assist me with addressing these mortgage related questions?

    (See attached file for full problem description)

    ---
    Using the following personal assumption
    Monthly gross income $3,000
    Money you have in savings for a down payment $25,000
    Your monthly payments for all existing debts $400
    Property tax rate in your area 1 percent
    Hazard/home insurance rate in your area 0.5 percent
    Borrower has an acceptable credit risk, with a respectable credit history

    2. Assume that the bank offers the following mortgage terms and rates:
    Term of loan 15 or 30 years
    Down payment required 10 percent to 20 percent
    Closing costs of Discount points of 1 percent
    Origination fees 2 percent
    Lender fees $300
    Credit report cost $20
    Escrow fee $300
    Lender's title insurance fee $400
    Recording fee $25
    Appraisal report $300
    Survey fee $200
    Termite infestation report $50
    Interest rate for a 15-year fixed mortgage 6.5 percent
    Interest rate for a 30-year fixed mortgage 7.0 percent
    Interest rate for 15-year adjustable-rate mortgage (ARM) 5.0 percent, adjusted every 12 months
    Payment-to-income (PTI) ratio range at your bank 28 percent to 33 percent
    Then, using Internet mortgage calculators answer the following questions (Microsoft Word and Excel if possible):

    1. How much do you qualify to borrow (assume 28% PTI) for a
    a. 15-year fixed-rate mortgage (10% down)?
    b. 30-year fixed-rate mortgage (10% down)?
    c. 15-year fixed-rate mortgage (20% down)?
    d. 30-year fixed-rate mortgage (20% down)?

    2. How much do you qualify to borrow (assume 33% PTI) for a
    a. 15-year fixed-rate mortgage (10% down)?
    b. 30-year fixed-rate mortgage (10% down)?
    c. 15-year fixed-rate mortgage (20% down)?
    d. 30-year fixed-rate mortgage (20% down)?

    3. Assuming closing costs are paid from savings, do the necessary calculations to answer the following questions:
    a. What is the monthly payment on a 30-year, fixed-rate loan of $100,000?
    b. What is the monthly payment on a 15-year, fixed-rate loan of $100,000?
    c. What is the monthly payment on an adjustable-rate loan of $100,000 for the first year?
    d. How much is the total interest paid on the 30-year loan in year 5?
    e. How much is the total interest paid on the 15-year loan in year 5?

    4. Given the following information on the adjustable-rate loan,
    o maximum rate is 12%
    o months before first adjustment is 36
    o months between adjustments is 12
    o rate change per adjustment is 2 percent
    o years before sell/pay off loan is 7
    o your savings rate is 4%
    o your State 1 Federal Tax Rate is 40%
    h. What is the cost difference between the adjustable-rate loan and the 30-year fixed rate loan if interest rates decrease?
    i. What is the cost difference between the adjustable rate loan and the 30-year fixed-rate loan if interest rates increase?
    j. Which loan would you prefer? Why?

    3. In the same Microsoft Word document, answer the following questions:
    ? What is the effective annual interest rate of the 15-year mortgage in question 1, if the discount rate is zero?
    ? What is the effective annual interest rate of the 15-year mortgage in question 1, if the discount rate is 2 percent?
    ? Your bank suffers from the typical maturity mismatch in bank assets and liabilities.
    o Could your bank make more adjustable-rate loans to reduce the mismatch problem?
    o What is the likely consequence of the above on the profit margin of adjustable-rate loans versus fixed-rate loans?

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    https://brainmass.com/business/interest-rates/63218

    Solution Preview

    Please find the solution below.

    I have provided the link of internet mortgage calculator which I used for the calculations.

    Using the following personal assumption
    Monthly gross income $3,000
    Money you have in savings for a down payment $25,000
    Your monthly payments for all existing debts $400
    Property tax rate in your area 1 percent
    Hazard/home insurance rate in your area 0.5 percent
    Borrower has an acceptable credit risk, with a respectable credit history
    2. Assume that the bank offers the following mortgage terms and rates:
    Term of loan 15 or 30 years
    Down payment required 10 percent to 20 percent
    Closing costs of Discount points of 1 percent
    Origination fees 2 percent
    Lender fees $300
    Credit report cost $20
    Escrow fee $300
    Lender's title insurance fee $400
    Recording fee $25
    Appraisal report $300
    Survey fee $200
    Termite infestation report $50
    Interest rate for a 15-year fixed mortgage 6.5 percent
    Interest rate for a 30-year fixed mortgage 7.0 percent
    Interest rate for 15-year adjustable-rate mortgage (ARM) 5.0 percent, adjusted every 12 months
    Payment-to-income (PTI) ratio range at your bank 28 percent to 33 percent
    Then, using Internet mortgage calculators, answer the following questions (Microsoft Word and Excel if possible):

    I have done all solutions using internet mortgage calculators. the answer cannot be submitted in a excel file since calculations are done on internet calculators itself which cannot be copied or downloaded since it requires very high level programming to do this. I have checked the solutions twice.

    I have used calculators & information from various sites among ...

    Solution Summary

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