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Real Estate Finance
Spring 2010
Midterm Exam 2 Version A
Dr. Stanley D. Longhofer
MW 8:00-9:15
DO NOT OPEN THIS EXAM UNTIL I GIVE YOU PERMISSION TO BEGIN!
Midterm exam rule
RE 611 / Fin 611 Real Estate Finance
Homework 1 Financing: Notes & Mortgages Dr. Stanley D. Longhofer Most of the questions below can be answered in one or two sentences. In some cases, a single word
RE 611 / Fin 611 Real Estate Finance
Homework 7 - Refinancing Analysis Dr. Stanley D. Longhofer 1) Ralph's existing mortgage has an interest rate of 6 percent and an outstanding balance of $179,950.43
RE 611 / Fin 611 Real Estate Finance
Spring 2010
Midterm Exam #2 Version A Suggested Solutions
Dr. Stanley D. Longhofer
MW 8:00-9:15
Problems
1) (30 points) Yertle the Turtle would like to purchase a
RE 611 / Fin 611 Real Estate Finance
Spring 2010
Final Exam Version A Suggested Solutions
Dr. Stanley D. Longhofer
MW 8:00-9:15
Problems
1) (20 points) Five years ago, Steve bought a $140,000 home usi
RE 611 / Fin 611 Real Estate Finance
Homework 2 Fixed-rate Mortgages Dr. Stanley D. Longhofer 1) Consider a $75,000, 7.75 percent, 30-year, interest-only mortgage with monthly interest payments. a) Ho
Pre-exam on Time Value of Money Concepts
Practice Exam Solutions
Dr. Stanley D. Longhofer
Note: The TVM practice problem set contains at least one example of each calculation required
in this exam.
Mu
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Adjustable-rate Mortgages
1) Interest-rate risk and Maturity Mismatch
a) One significant problem for lenders is the fact that fixed-rate mortgages
im
RE 611 / Fin 611 Real Estate Finance
Homework 8 Residential Underwriting
Dr. Stanley D. Longhofer
1) Mark wants to buy a house. To do so, he must incur a mortgage. A local lender has
determined that M
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Residential Mortgage Underwriting & Closing
1) What is underwriting?
2) Why do borrowers default?
a) Ability-to-pay theory
b) Equity theory
3) Classi
Homework 3 Effective Borrowing Costs and Annual Percentage Rate Dr. Stanley D. Longhofer 1) Consider a $75,000, 30-year, fixed-rate mortgage with 7.75 percent interest and monthly payments. The lender
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Overview of Real Estate Finance
1) Overview of Real Estate Finance
a) Real estate finance involves the institutions, markets, and instruments used
to
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Commercial Property Finance
1) Types of Commercial Mortgage Loans
a)
b)
c)
2) Long-term, permanent financing
a) Sources of long-term financing:
b) St
Homework 10 - Secondary Mortgage Market Securities Dr. Stanley D. Longhofer 1) Suppose that a pass-through security is issued at par. a) Explain briefly what will happen to the value of the pass-throu
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Closing Costs & Effective Borrowing Costs
1) Closing Costs
a) Statutory Costs
b) Third-Party Charges
c) Additional Finance Charges May come as fixed
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Fixed-rate Mortgages
1) Fixed-rate, Fully Amortizing Mortgages a) Constant Amortization Mortgages (CAM)
Following the Depression, the long expansion
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Comparing Financing Alternatives
1) If I want to choose between two financing options, how do I do it? a) If the loan amount and the term of the loan
RE 611 / Fin 611 Real Estate Finance
Lecture Notes Alternative Mortgage Products
1) Introduction to Alternative Mortgage Products
a) The standard fixed- and adjustable-rate mortgages are common produc
Abdulrahman Alotaibi
RE 611 / Fin 611 Real Estate Finance
Homework 3 Effective Borrowing Costs and Annual Percentage Rate
Dr. Stanley D. Longhofer
1) Consider a $75,000, 30-year, fixed-rate mortgage w
RE 611 / Fin 611 Real Estate Finance
Homework 5 Incremental Borrowing Costs
Dr. Stanley D. Longhofer
Abdulrahman Alotaibi
1) Suppose you want to purchase a property worth $120,000 property and have tw
RE 611 / Fin 611 Real Estate Finance
Homework 4 - Adjustable Rate Mortgages Dr. Stanley D. Longhofer 1) Consider a 1-year ARM, 30-year amortization, $75,000 mortgage, Indexed to the 1year constant mat
Homework 6 Refinancing Decisions Partial Solutions Dr. Stanley D. Longhofer 1) Suppose you borrowed $80,000 five years ago at 9 percent interest with a 30-year amortization schedule. The loan also had
RE 611 / Fin 611 Real Estate Finance
Homework 8 Residential Underwriting Dr. Stanley D. Longhofer 1) Mark wants to buy a house. To do so, he must incur a mortgage. A local lender has determined that M
Homework 9 - Commercial Mortgages Solutions Dr. Stanley D. Longhofer 1) Four years ago you took out a $5 million commercial mortgage at 7.25 percent interest with a 20-year loan term. Current market r
RE 611 / Fin 611 Real Estate Finance
Homework 9 Commercial Mortgages Solutions
Dr. Stanley D. Longhofer
1) Four years ago you took out a $5 million commercial mortgage at 7.25 percent
interest with a
RE 611 / Fin 611 Real Estate Finance
Excel Spreadsheet Assignment #1 Mortgage Amortization Table Dr. Stanley D. Longhofer Develop an Excel spreadsheet that shows the amortization of a constant payment
RE 611 / Fin 611 Real Estate Finance
Residential Mortgage Underwriting
Practice Problems Solutions
Dr. Stanley D. Longhofer
1) Luke wants to buy a house. To do so, he must incur a mortgage. A local le
Time Value of Money Practice Problems
Dr. Stanley D. Longhofer
1) Jim makes a deposit of $12,000 in a bank account. The deposit is to earn interest
annually at the rate of 9 percent for seven years.
a
Time Value of Money Practice Problems Solutions
Dr. Stanley D. Longhofer
1) Jim makes a deposit of $12,000 in a bank account. The deposit is to earn interest
annually at the rate of 9 percent for seve
Review Sheet for Background Concepts Pre-Exam
Dr. Stanley D. Longhofer
The pre-exam on background concepts will consist of 50 multiple-choice/true-false
questions. The questions will be evenly distrib