A fully amortizing mortgage loan in the amount of $92,758 for 20 years with payments to be made monthly is offered to a borrower at 8.5%. However, the borrower indicated that he or she wanted to reduce the contract rate by 1%. The lender felt comfortable discounting the loan by offering to loan the borrower the same amount of money, $92,758 for 20 years at a fixed rate of 7.5% with constant payments but only if the borrower would pay the lender an up front fee of $3,330 paid directly to the lender. In addition, if the borrower accepts this loan, the borrower would be required to pay an additional 1% in origination fees to the lender on top of a $500 charge to an appraiser for appraisal fees.

Assuming the borrower and lender initiate this loan, compute Lender’s Yield. 

Express your answer as a % rounded to two decimal places.

Answer rating: 100% (QA)

Lenders Yield is a measure of the effective interest rate earned by the lender taking into account n... View the full answer