Loan A
Mortgage: $100,000
Interest Rate: 7^3/4 (monthly payments)
Term: 30 years
1) What is the monthly payment?
2) What is the balance on this mortgage at the end of 3 years (36 months)?
3) How much principal was paid during the 3 years?
4) How much interest was paid during the 3 years?
Our lender is offering an alternative $100,000 loan at 7^1/2% for 30 years with 2 points.
5) What is the effective interest rate on this alternative mortgage if held to maturity?
6) If this alternative mortgage is only held for 3 years (36 months), what is the effective interest rate?
7) If loan A has a prepayment penalty of 3% and the loan is paid off in 3 years (36 months), what is the effective interest rate?
8) If loan A has a 2 point fee and a 3% prepayment penalty, and if the loan is paid off in 3 years (36 months), what is the effective interest rate?