PLEASE SOLVE ALL THE QUESTIONS NOT JUST ONE. ALSO PLEASE PROVIDE FORMULAS USED,

Question

PLEASE SOLVE ALL THE QUESTIONS NOT JUST ONE. ALSO PLEASE PROVIDE FORMULAS USED, DO NOT JUST UPLOAD A SCREEN SHOT OF EXCEL.

1.- Original loan balance = 450,000. Mortgage rate is 4.15%. 15 yr fixed rate. Monthly payment. What is the principal payment of 60th payment?

2.- Original loan balance = 510,000. Mortgage rate is 4.2%. 30 yr fixed rate. Monthly payment. What is the principal payment of 300th payment?

3.- Original loan balance = 490,000. Teaser rate is 2.8%. 5/1 ARM of 30 year term. Margin is 3%. Index is Libor. At the origination the Libor rate was 1.1%. Life of loan cap is 4%. Annual rate cap is 1.5%. At 5 year, Libor became 3%. What is the new monthly payment?

4.- Original Loan balance is 470,000. The rate is 5.5%. This is option ARM with monthly payment. For the first year, the monthly payment was capped at 1,600. After 1 year, what is the new balance?

Explanation / Answer

--

1. The monthly Equated Monthly Installment = EMI = use the PMT function in Excel with the following parameters:

PMT(mortgage rate, Number of Periods, Original Loan Balance)

Divide the annual mortgage rate by 12 to get the monthly rate

Number of periods = 15 years * 12 months = 180 months

= PMT(0.045/12, 180, 450000)

= $3362.52

The Principal payment of the 60th payment = $2188.66

The principal payment is found using the Excel function PPMT

PPMT(mortgage rate, period, Number of Periods, Original Loan Balance)

=PPMT(0.045/12, 60, 180, 450000)

= $(2188.66)

2.

=PPMT(0.042/12, 300, 30*12, 510000)

= $ (2015.27)

3.

5/1 ARM means that the rate is fixed for the initial 5 years and then it gets adjustable in the next 25 years

LIBOR = London Interbank Offered Rate

Teaser rate is just the introductory rate to attract customers

Formula:

Amount = (Principal * (1+Rate)*Number of terms ) / ((1+rate)*(num - 1))

Assuming the teaser rate lasts for just the 1st year,

PMT for year 1:

= PMT(0.028/12, 30*12, 490000)

=($2013.38)

The monthly payment is $2065.86 from 2nd year onwards

= PMT(0.03/12, 30*12, 490000)

= ($2065.86)

4.

Without the cap, the balance would have been $463,125

But, with the cap, the balance will be:

1600*12 = Capital - 19200 = 470,000 - 19,200 = $450,800

So there is a difference of 463125 - 450800 = $12,325 due to the cap

So the new balance is $450,800

--

--

180 ($3,362.52) ($1,687.50) ($1,754.97) ($1,680.92) ($1,761.55) ($1,674.31) ($1,768.16) ($1,667.68) ($1,774.79) ($1,661.03) ($1,781.44) ($1,654.35) ($1,788.12) ($1,647.64) ($1,794.83) ($1,640.91) ($1,801.56) ($1,634.15) ($1,808.32) ($1,627.37) ($1,815.10) ($1,620.57) ($1,821.90) ($1,613.73) ($1,828.74) ($1,606.88) ($1,835.59) ($1,599.99) ($1,842.48) ($1,593.08) ($1,849.39) ($1,586.15) ($1,856.32) ($1,579.19) ($1,863.28) ($1,572.20) ($1,870.27) ($1,877.28) ($1,884.32) ($1,891.39) ($1,898.48) ($1,905.60) ($1,912.75) ($1,919.92) ($1,927.12) ($1,934.35) ($1,941.60) ($1,948.88) ($1,956.19) ($1,963.52) ($1,970.89) ($1,978.28) ($1,985.70) ($1,993.14) ($2,000.62) ($2,008.12) ($2,015.65) ($2,023.21) ($2,030.80) ($2,038.41) ($2,046.06) ($2,053.73) ($2,061.43) ($2,069.16) ($2,076.92) ($2,084.71) ($2,092.53) ($2,100.37) ($2,108.25) ($2,116.16) ($2,124.09) ($2,132.06) ($2,140.05) ($2,148.08) ($2,156.13) ($2,164.22) ($2,172.33) ($2,180.48) ($2,188.66)

Related Questions

Navigate

• Browse (All)
• Browse P
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.