Real estate finance assignment

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homework_2_optional_answer_sheet.xlsx
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Answer Sheet

Fin 331
Homework 2 You may wish to summarize your input date to use for your solution if you intend to use Excel to make your computations.
Optional Answer Sheet
Name: Type Your Name Here Loan A B C D
LTV
Description 80% LTV Lower Rate 80% LTV 90% LTV Fixed 30 80% LTV 5-Year ARM Rate
Higher Rate
Loan A B C D
Down Payment
Loan Amount
Monthly Principal & Interest
Monthly Mortgage Insurance Payment
Property Taxes/month
Insurance/Month
Total House Payment
Loan Payment used to qualify to ARM
House Payment used to qualify for ARM
Housing Ratio
Total Debt to Income Ratio
APR for the Loan Not Required
Do they qualify for this loan?
Down Payment
Closing Costs
Prepaid Finance Charges
Total Cash to Close
Analysis of Your Calculations Type Your Name Here
Calculate the difference in the cash required to close and the total monthly payment for the 30 year loan with the higher rate and the 90% loan with mortgage insurance.
Additional Cash to Close [Loan B Less Loan C] Additional Monthly Pmt [Loan B Less Loan C]
Should these buyers take the 90% loan and use the reduced cash to close to pay off their student loans? Explain you recommendation.
Consider the ARM loan.
What is the balance after 5 years?
What is the maximum possible principal and interest payment on that loan in year 6, when the rate adjusts?
Which Loan option would you recommend? Loan
Why do you suggest this option?

Check YES

Check NO