Ch.16-Study Questions-pg452 - Chapter 16: Commercial...

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Chapter 16: Commercial Mortgage Types and Decisions Robb Page 06-Apr-2010 FIN 497: Real Estate Principles Professor Clements Study Questions – pages 452. 5. Assume the annual interest rate on a $500,000 7-year balloon mortgage is 6%. Payments will be made monthly based on a 30-year amortization schedule. a) What will be the monthly payment? $2,997 b) What will be the balance of the loan at the end of year 7? $448,197 c) What will be the balance of the loan at the end of year 3? $480,420 d) Assume that interest rates have fallen to 4.5% at the end of year 3. If the remaining mortgage balance at the end of year 3 is refinanced at the 4.5% annual rate, what would be the new monthly payment assuming a 27-year amortization schedule? $2,564.10 e) What is the difference in the old 6% monthly payment and the new 4.5% payment? $433.65 less than the 6% (old) payment . f) What will be the remaining mortgage balance on the new 4.5% loan at the end of year 7 (four years after refinancing)? $440,400 g) What will be the difference in the remaining mortgage balances at the end of year 7 (four years after refinancing)? The original loan balance at 6% is $448,197
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Ch.16-Study Questions-pg452 - Chapter 16: Commercial...

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