End of Chapter 19 Questions and Answers

End of Chapter 19 Questions and Answers - End of Chapter 19...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
End of Chapter 19 Questions and Answers 1. What is the difference between the primary mortgage market and the secondary market? Answer: The primary mortgage market is where loans are originated while the secondary mortgage market is where existing loans are traded. 2. What information does a borrower need to know to calculate an APR? When will the contract rate and the APR be identical? Answer: The contract rate, term of the loan and points are sufficient to calculate an APR where one point equals one percent of the original loan. The APR or annual percentage rate and the contract rate will only be equal if no points are charged. 3. What information does a borrower need to know in order to calculate the effective borrowing costs? Answer: The same information as in #2 above as well as the expected time the loan will be held so a payoff can be calculated. 4. When points are charged the effective borrowing costs can increase dramatically if a loan is prepaid. When will the APR and effective borrowing costs be identical, independent of when the loan is prepaid?
Image of page 1

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

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    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.

    Student Picture

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

  • Left Quote Icon

    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.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    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.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern