Fannie Mae charges a loan-level price adjustment (LLPA) on all mortgages, which represents a fee homebuyers...

 

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Fannie Mae charges a loan-level price adjustment (LLPA) on all mortgages, which represents a fee homebuyers seeking a loan must pay. The rate paid depends on the credit score of the borrower, the amount borrowed, and the loan-to-value (LTV) ratio. The LTV ratio is the ratio of amount borrowed to appraised value of the home. For example, a homebuyers who wishes to borrow $250,000 with a credit score of 730 and an LTV ratio of 80% will pay 0.75% (0.0075) of $250,000, or $1875. The table shows the LLPA for various credit scores and an LTV ratio of 80%. a. Construct a function C = C (s), where C is the loan-level price adjustment (LLPA) and s is the credit score of an individual who wishes to borrow $300,000 with an 80% LTV ratio. b. What is the LLPA on a $300,000 loan with an 80% LTV ratio for a borrow whose credit score is 725? c. What is the LLPA on a $300,000 lawn with an 80% LTV ratio for a borrow whose credit score is 670? Credit score Loan-Level Price Adjustment Rate (LLPA) < 659 3.00% 660-679 2.75% 680-699 1.75% 700-719 1.25% 720-739 0.75% > 740 0.50% Please show all steps and work. Fannie Mae charges a loan-level price adjustment (LLPA) on all mortgages, which represents a fee homebuyers seeking a loan must pay. The rate paid depends on the credit score of the borrower, the amount borrowed, and the loan-to-value (LTV) ratio. The LTV ratio is the ratio of amount borrowed to appraised value of the home. For example, a homebuyers who wishes to borrow $250,000 with a credit score of 730 and an LTV ratio of 80% will pay 0.75% (0.0075) of $250,000, or $1875. The table shows the LLPA for various credit scores and an LTV ratio of 80%. a. Construct a function C = C (s), where C is the loan-level price adjustment (LLPA) and s is the credit score of an individual who wishes to borrow $300,000 with an 80% LTV ratio. b. What is the LLPA on a $300,000 loan with an 80% LTV ratio for a borrow whose credit score is 725? c. What is the LLPA on a $300,000 lawn with an 80% LTV ratio for a borrow whose credit score is 670? Credit score Loan-Level Price Adjustment Rate (LLPA) < 659 3.00% 660-679 2.75% 680-699 1.75% 700-719 1.25% 720-739 0.75% > 740 0.50% Please show all steps and work.

Answer rating: 100% (QA)

1 Given a home buyer wishes to borrow 250000 Credit Score 730 E LTV Ratio 80 will ... View the full answer