None two different buyers purchased a home 10 years ago. The first buyer took a 30-year 150,000 fix interest rate mortgage with an APR 4.5 %. The secondbuyer took a 30-year $150,000 adjustable rate mortgage (ARM) with starting interest rate of 3%. after 4 years the interest rate rose to 5.5% (it had aninterest rate of 3% for years 1, 2, 3, and 4 and the interest rate changed to 5.5% in year 5 for the remaining balance and remaining time), bothhomeowners sold their house after 10 years. which homeowner paid the lease for the 10 years they paid on their loan? (pay attention to time on the ARM).

The first homeowner with the fixed rate mortgage paid less in interest over the 10 years.Here's…

Answered: two different buyers purchased a home…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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A homeowner took out a 20-year fixed-rate mortgage of $175,000. The mortgage was taken out 6 years ago at a rate of 6.75 percent. If the homeowner refinances, the charges will be $3,050. What is the highest interest rate at which it would be beneficial to refinance the mortgage? Note: Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. APR 6.00
A homeowner took out a 20-year fixed-rate mortgage of $185,000. The mortgage was taken out 9 years ago at a rate of 6.8 percent. If the homeowner refinances, the charges will be $2,950. What is the highest interest rate at which it would be beneficial to refinance the mortgage? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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Ten years ago the Jacksons bought a house, taking out a 30 year mortgage for $160,000 at 5.75%. This year (exactly 10 years later) they refinanced the house, taking out a new 30 year mortgage for the remaining balance at 3.625%. What was the monthly payment on the original 5.75% mortgage? What was the remaining balance after 10 years (the amount they then refinanced)? How much interest did they pay during those first 10 years? What is the monthly payment on the refinance 3.625% mortgage? How much interest will they pay over the 30 year term of the refinance? How much total interest will they pay over the full 40 years the Jacksons have a loan for the house?
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