To buy your dream home you use a 4/16 reset loan that pays interest only (bullet loan) for the first 4 years, followed with a reset payment to amortize over the remaining 16 years. The loan amount is $180,000 at 5.5%, with 2 discount points (to the lender) and $875 in third party closing costs which the borrower must pay.

a). What net amount does the lender disburse?
b). What net amount do you as a borrower receive?
c). What is your monthly payment during the first 4 years? 

d). What is your monthly payment during the remaining 16 years?
e). What is the FTLAPR on this loan?
f). What is your balance 6 years after you take out the loan 

g). If you repay this loan after 6 years, what is the yield (expressed as an APR) for the lender?
h). What is the yield expressed as an EAR? 

i). If you repay this loan after 6 years, what is the effective borrower cost (EBC) to you (expressed as an APR)?
j). What is the EBC expressed as an EAR?

Answer rating: 100% (QA)

a What net amount does the lender disburse 098180000 176400 b What net amount do you as a b... View the full answer