mortgages.pptx

# mortgages.pptx - MORTGAGES MIDTERM REVIEW POSSIBILITIES...

• 20

This preview shows pages 1–6. Sign up to view the full content.

M I D T E R M R E V I E W MORTGAGES

This preview has intentionally blurred sections. Sign up to view the full version.

POSSIBILITIES Regular Mortgage Mortgage with Points Mortgage with Ballon Mortgage with Ballon and Points
REGULAR MORTGAGE Number of period must be calculated which is usually the number of years multiplied by the compounding frequency. For most mortgages. For most mortgages we multiple years by 12 months. The stated interest rate is usually an APR, so in order to use Excel functions, the APR must be divided by the compounding frequency which in this case is 12 months. The amount borrowed gives us the present value. The loan is usually amortized so the future value is zero.

This preview has intentionally blurred sections. Sign up to view the full version.

MORTGAGE WITH BALLOON 1. Calculate the payments using the regular, fully amortized mortgage. 2. Change the number of periods so it corresponds to when the balloon payment must occur. 3. The balloon is calculated as the future value with the new number of periods.
MORTGAGE WITH POINTS 1. Calculate the payments using the regular, fully amortized mortgage 2. Change the present value so that it reflects the amount received from the lender rather than the amount that is owed 3. Calculate the new interest rate 4. Convert the new rate into and APR and EAR

This preview has intentionally blurred sections. Sign up to view the full version.

This is the end of the preview. Sign up to access the rest of the document.
• Fall '12
• Vadim

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern