Nickname for grades_
Name _
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 rules:
1. You may use one, 8 x 11 inch pages of notes on th
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 using an 80 percent loan-to
value (LTV) first mortgage amo
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 new throne for $20,000 and is
wondering whether he shou
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) How large are each of the monthly payments? b) What will
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 rates for a similar loan are now 6.00 percent. How large
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 a 2 percent prepayment penalty is paid off within the
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 maturity Treasury with a 3 percent margin, and 2-6 caps (2
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 or a short list is sufficient. 1) What is the legal dis
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 requires that the borrower pay two points to originate
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) Classifications of mortgage loans
a) Conventional loans
Unins
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
impose significant interest-rate risk on lenders.
b) In a
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 transfer money and credit for the purpose of developin
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) Structure of long-term, commercial mortgages:
Balloon pay
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-through if market interest rates rise. Make sure you explain
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 charges or as points, so
that the amount varies with th
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 and growth in incomes made lenders recognize longer ter
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 loans are the same:
b) What if the loan amount and/or the t
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 products that
are popular with borrowers, but many other prod
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. His currently monthly payment on this loan is $1,088.
RE 611 / Fin 611 Real Estate Finance
Homework 5 Incremental Borrowing Costs Dr. Stanley D. Longhofer 1) Suppose you want to purchase a property worth $120,000 property and have two loan options. Option A is an 80 percent loan-to-value, 25-year, fixed-rate
RE 611 / Fin 611 Real Estate Finance
Spring 2012
Midterm Exam #1 Version A Suggested Solutions
Dr. Stanley D. Longhofer
MW 8:00-9:15
Problems
1) (10 points) Consider a 1-year ARM indexed to the 1-year Treasury security with a
3 percent margin and 2-5 caps
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 20-year loan term. Current market rates for a similar l
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 mortgage over the life of the loan. Your spreadsheet s
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 lender has
determined that Luke can afford a monthly prin
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) How much will Jim have on deposit at the end of seven
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 seven years.
a) How much will Jim have on deposit at the en
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 distributed to test both your understanding of
these concepts
Pre-exam on Time Value of Money Concepts
Practice Exam
Dr. Stanley D. Longhofer
Note: The TVM practice problem set contains at least one example of each calculation required
in this exam.
Multiple-Choice / True-False Questions 2 points each
_ 1. Suppose y
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.
Multiple-Choice / True-False Questions 2 points each
_ 1.
Name _
Real Estate Finance
Spring 2010
Final Exam 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 rules:
1. You may use TWO, 8 x 11 inch pages of notes on the exam (front and back).