Solved: You have a 20 year 100 000 mortgage with a 9

percent

You have a 20-year $100,000 mortgage with a 9 percent interest rate. (To reduce the size of
this problem, assume that payments are made annually and not monthly as would be the
normal case with a mortgage.)
a) Determine the repayment schedule.
b) How much is owed after ten years?
c) How much will be the total payments made over the 20 years?
d) How much interest is paid over the 20 years?
e) If you increase your first-year payment to include the next year’s principal payment, how
much interest will you pay at the end of the second year?
f) If each year your payment includes the current required payment and the subsequent year’s
principal repayment, what will be the life of the mortgage?
g) If you follow the process in (f), what are the total payments and the interest payments made
over the life of the mortgage?
h) What are the advantages and disadvantages associated with this early payment strategy?
i) If interest rates decline to 7 percent, what is the current value of the mortgage based on the
assumption that the loan will be outstanding for 20 years? (That is, if you were buying this
mortgage as an investment for a mortgage pool, how much would you be willing to pay?)
j) If interest rates decline to 7 percent and you follow the strategy in (f), what is the current value
of the mortgage?
k) If interest rates decline to 7 percent and you expect to refinance after four years (i.e., repay
the loan with no prepayment penalty), what is the current value of the mortgage?
l) Why do your valuations in (i) through (k) differ?

You have a 20 year 100 000 mortgage with a 9 percent

ANSWER
https://solvedquest.com/you-have-a-20-year-100-000-mortgage-with-a-9-percent/

Reach out to freelance2040@yahoo.com for enquiry.

Powered by TCPDF (www.tcpdf.org)