BUSI 422 Read & Interact Brueggeman & Fisher Chapter 6 solutions complete answers

BUSI 422 Read & Interact Brueggeman & Fisher Chapter 6 solutions complete answers

 

A buydown will make it ____ for a borrower to qualify for a loan.

 

A buydown loan is used during periods of ____ interest rates to help borrowers qualify for financing.

 

The wraparound lender makes payments on the _____ loan.

 

With a buydown loan, the seller pays to _____ the interest rate on the loan.

 

A wraparound loan allows a borrower to _____________ while keeping an existing loan in place.

 

If interest rates are expected to fall, the premium a buyer would pay for a below-market-interest-rate loan will be:

 

If a wraparound mortgage is for $100,000, and the initial loan has a balance of $70,000, the borrower will receive _______ in cash.

 

The financing premium is the value of ________ a loan when purchasing a property.

 

A borrower would take a second mortgage if ______.

 

Below market loans have _________.

 

The amount a new lender is willing to pay to purchase a mortgage is called:

 

When interest rates go up, lenders would like ______.

 

Who provides financing with a purchase money mortgage?

 

The   value of a loan is the amount that a new investor is willing to pay to receive the remaining payments.

 

If your current mortgage of $55,000 has a rate of 8% and you have an investment opportunity with an expected return of 5%, should the borrower repay the loan early?

 

A biweekly payment schedule means that a payment is made ______.

 

With a biweekly mortgage, there are ______ periods per year.

 

The cost of making a new loan after taking fees and other costs into account is often called the ______.

 

True or false: The IRR and the years held after refinancing have a linear relationship.

 

Suppose there is a pre-payment penalty of 3% on 80,000 and an origination fee of $1,000 on a new loan. The cost to refinance is:

 

Which of the following determine whether to refinance a mortgage?

 

True or false: The IRR from savings following refinancing is increasing at an increasing rate with the number of years held after refinancing.

 

For low loan-to-value ratios, the incremental borrowing cost:

 

The borrower benefits by having a   amortization period.

 

The incremental borrowing cost is the ______ that lenders require to lend additional funds.

 

(75,000/90,000) x 4% + (15,000/90,000) x 4.9% =  % (round to the nearest whole number)

 

Another word for the marginal cost of borrowing is the ________ cost of borrowing.

 

A second mortgage is preferred to a larger single mortgage if the rate of the second mortgage is   (higher/lower) than the incremental cost.

 

The marginal cost can be thought of as:

 

Given a choice between mortgage A ($125,000 at 3%) and mortgage B ($150,000 at 5%), the incremental cost of borrowing is the cost to borrow an additional:

 

If interest rates rise over time, borrowers with a fixed rate mortgage will not:

 

(75,000/90,000)x4%+(15,000/90,000)x4.9%=       % (round to the nearest whole number)

 

A loan of $125,000 with 3 points has a loan origination fee of how much?

 

If the incremental cost of borrowing an additional $20,000 is 18%, the alternative of a second mortgage must have a rate equal to what to be preferable?

 

Which party benefits with a longer amortization period?

 

A purchase money mortgage typically has:

 

The effective cost of refinancing includes which of the following?

 

An alternative way to obtain additional funds rather than borrowing more is to obtain a __________________ mortgage.

 

Generally, borrowers pay the same rate for any loan that has a loan-to-value ratio less than       %.

 

By making biweekly mortgage payments, what may occur?

 

With a wraparound loan, who makes payments on the original loan?

 

A ___________ loan allows a borrower to obtain additional financing while keeping an existing loan in place. 

 

The ______________ of a loan is the amount that a new investor is willing to pay to receive the remaining payments. 

 

When comparing alternative investments to making biweekly mortgage payments, you must find an effective rate that compounds: 

 

If your current mortgage of $55,000 has a rate of 4% and you have an investment opportunity with an expected return of 7%, should the borrower repay the loan early?

 

Which of the following loans allows the seller to pay the lender a fee to lower the interest rate?

 

The price of a property with a purchase money mortgage will typically be ______________, relative to a traditional mortgage, all else equal. 

 

Mortgages with a loan origination fee will have a higher incremental ________ of borrowing, all else equal. 

 

A ___________ loan is used during periods of high interest rates to help borrowers qualify for financing. 

 

Increasing a first mortgage or adding a second mortgage will both _________ (increase/decrease) the loan-to-value ratio.

 

Under what interest rate condition might a lender pay borrowers to repay a loan early?

 

If a buyer does not have enough cash, an option may be a        mortgage.

 

The financing _________ is the value of assuming a loan when purchasing a property. 

 

Mortgage A is for 30 years, $75,000, at a rate of 4%. What is the incremental cost of borrowing mortgage B, which is for 30 years, $90,000, and a rate of 5%? Both mortgages require monthly payments.

 

Suppose there is a pre-payment penalty of 3% on 75,000 and an origination fee of $1,000 on a new loan. The cost to refinance is:

 

If below-market financing is not transferable, the premium a buyer would pay for a below-market-interest-rate loan will be: 

 

True or false: the buydown amount is likely added into the price of the property. 

 

True or false: The IRR from savings following refinancing is increasing at an increasing rate with the number of years held after refinancing

 

Which of the following allows control over default on the first mortgage?

 

 

biweekly payments could:                 

a borrower finds that the incremental cost of borrowing an extra $10,000 is 14%. a second loan can be obtained at 15% so the borrower would be better off borrowing a smaller amount on the original loan and borrowing $10,000 with a second loan               

A borrower finds that the incremental cost of borrowing an extra $10,000 is 14%. The borrower can earn 12% on alternative investments of comparable risk so he would be better off by not borrowing the extra 14%.           

the cash equivalent value of a house that is sold with favorable financing is usually less than its sale price                

for low loan-to-value ratios, the incremental borrowing cost:             

home equity loans DO require a mortgage lien on the property                   

if interest rates are expected to fall, the premium a buyer would pay for a below-market-interest-rate loan will be:                   

if interest rates decrease, the market value of a loan previously made will increase                

if interest rates rise over time, borrowers with a fixed rate mortgage will not:            

If your current mortgage of $55,000 has a rate of 8% and you have an investment opportunity with an expected return of 5%, should the borrower repay the loan early?                   

the incremental borrowing cost is the __________ that lenders require to lend additional funds            

the incremental cost of borrowing may also be referred to as the marginal cost of borrowing           

a loan with biweekly payments will have less interest than a monthly loan with the same interest rate and loan term                   

the marginal cost can be thought of as:                   

the market value of a loan is             

when calculating the cash equivalent value of an assumable loan, you find the present value of the payments using the

which determine whether to refinance a mortgage