DeezNutz3
09-28-2005, 08:48 PM
Trying to do this for a group project.
$80,000 loan, $20,000 down payment, i=6.25%. On the payment schedule section of the mortgage estimate it says 59 payments of $493.95 and one lump sum of $75,378.08. When i use my financial calculator I get $492.57 for the monthly payment. On the second page it also shows my Annual percentage rate as a yearly rate: 6.373% which is different than the stated estimated loan expenses on the first page of the good faith estimate-6.25%.
Calculations for 5 year Balloon Mortgage:
Loan Amount = $80,000
Monthly Debt Service:
Number of Payments (n): 360
Present Value (PV): -$80,000
Interest Rate (I/Y): 6.250%
Future Value (FV): 0
Payment (pmt): 492.57
A balloon mortgage is an alternative form of a fixed rate mortgage. The payments are as if the loan was amortized over 30 years, but is “prepaid” at end of year 5. We will assume that the borrower refinances their home with another balloon mortgage at the end of the 5 years.
EOY5 outstanding balance:
Number of Payments (n): 300
Future Value (FV): 0
Interest Rate (I/Y): 6.250%
Payment (pmt): 492.57
Present Value (PV): $74, 669.22
Yield earned on 5 year Balloon:
Present Value (PV):-80,000
Number of Payments (n): 60
Payment (pmt): 492.57
Future Value (FV): 74,669.22
Interest Rate (I/Y): 6.249 or 6.25% --i feel this should be higher??
I have to then assume the buyer refinances the outstanding balance of this balloon mortgage for another 5 years.
This amount will then have to be refinanced over the next 5 years.
New monthly debt service:
Number of Payments (n): 360
Present Value (PV): -74, 669.22
Interest Rate (I/Y): 6.250%
Future Value (FV): 0
Payment (pmt): $459.75
New Balloon outstanding balance (sum to be paid EOY10):
Number of Payments (n): 300
Future Value (FV): 0
Interest Rate (I/Y): 6.250%
Payment (pmt): 459.75
Present Value (PV): $69,694.19
I can do a yield for each seperate mortgage, but I think my teacher wants a total yield by the bank and with different payments in the periods I don't know how to do this.
Thanks for any help,
Donny
$80,000 loan, $20,000 down payment, i=6.25%. On the payment schedule section of the mortgage estimate it says 59 payments of $493.95 and one lump sum of $75,378.08. When i use my financial calculator I get $492.57 for the monthly payment. On the second page it also shows my Annual percentage rate as a yearly rate: 6.373% which is different than the stated estimated loan expenses on the first page of the good faith estimate-6.25%.
Calculations for 5 year Balloon Mortgage:
Loan Amount = $80,000
Monthly Debt Service:
Number of Payments (n): 360
Present Value (PV): -$80,000
Interest Rate (I/Y): 6.250%
Future Value (FV): 0
Payment (pmt): 492.57
A balloon mortgage is an alternative form of a fixed rate mortgage. The payments are as if the loan was amortized over 30 years, but is “prepaid” at end of year 5. We will assume that the borrower refinances their home with another balloon mortgage at the end of the 5 years.
EOY5 outstanding balance:
Number of Payments (n): 300
Future Value (FV): 0
Interest Rate (I/Y): 6.250%
Payment (pmt): 492.57
Present Value (PV): $74, 669.22
Yield earned on 5 year Balloon:
Present Value (PV):-80,000
Number of Payments (n): 60
Payment (pmt): 492.57
Future Value (FV): 74,669.22
Interest Rate (I/Y): 6.249 or 6.25% --i feel this should be higher??
I have to then assume the buyer refinances the outstanding balance of this balloon mortgage for another 5 years.
This amount will then have to be refinanced over the next 5 years.
New monthly debt service:
Number of Payments (n): 360
Present Value (PV): -74, 669.22
Interest Rate (I/Y): 6.250%
Future Value (FV): 0
Payment (pmt): $459.75
New Balloon outstanding balance (sum to be paid EOY10):
Number of Payments (n): 300
Future Value (FV): 0
Interest Rate (I/Y): 6.250%
Payment (pmt): 459.75
Present Value (PV): $69,694.19
I can do a yield for each seperate mortgage, but I think my teacher wants a total yield by the bank and with different payments in the periods I don't know how to do this.
Thanks for any help,
Donny