Question: A lender believes 6% is a competitive yield on a 75% loan to value mortgage for 30 years and that other lenders are pricing loans

A lender believes 6% is a competitive yield on a 75% loan to value mortgage for 30 years and that other lenders are pricing loans of a similar nature at that rate. If the lender wants to earn a yield higher than the competitors in the market and wants to receive 7% and believes the borrower will repay the loan at the end of 10 years, how much discount points should he charge the borrower at loan origination? (Assume a notional amount of $100,000 is the 75% being borrowed. State your final answer rounded to 2 decimals)

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock

To calculate the discount points that the lender should charge the ... View full answer

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

The Little Steel Company is a small steel fabricator that makes steel parts for various metal machine shop clients. When Little Steel Company receives an order from a client, it must locate and...

When is it appropriate to admit in a Company Investigation Report that an employee has violated a law or regulation? A. When the employee's conduct meets all elements of the statute or regulation. B....

Read the case study "Southwest Airlines," found in Part 2 of your textbook. Review the "Guide to Case Analysis" found on pp. CA1 - CA11 of your textbook. (This guide follows the last case in the...

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...

QUESTION 5 3 points Saved What is the EAR on a credit card loan with a 18.99% APR and with monthly payments? (State your answer rounded to 2 decimalsand interest rates are quoted always as example...

QUESTION 11 3 points Saved A lender believes 6% is a competitive yield on a 75% loan to value mortgage for 30 years and that other lenders are pricing loans of a similar nature at that rate. If the...

Need help figuring out problem #40, #42, and #45 in the attached document. I have the answers for the problems, but need to see how they are worked out. FIN 142 - Real Estate Finance Problem Set 2 1....

Case Analysis 1. Compute the yield to maturity of Land'o'Toys' bonds before the purchase announcement and use it to determine the likely current bond rating. (Compare YTM to the table on p. 269)....

1. P repare journal entries to record the following hypothetical 2006 events: a. A customer deposits $50,000 in a WaMu sav ings account on 1/1/2006 . b. WaMu pays 1% (annual) interest on that deposit...

i need help with the below assignment use the pdf attached to work it out Why is the loan in default? Explain which reasons are most relevant to Drive.What economic factors contributed to the...

I need a solution to this question in number 3 of real estate finance on an article called working at workout: commercial real estate debt in distress. 3. Calculate the expected return (IRR) to drive...

1. Real-world financial statements do not follow a cookie-cutter design: each one is a little bit different. The same account may be called something different on different firms' statements, and...

Knowing that the lengths X, Y and Z in the figure below are 2 m, 4 m and 2 m, respectively. The length of cable AB in m is: X FAB= 200 N B Y FAC=240 N C Xx Z

E - commerce has transformed the way businesses operate globally, including in Namibia. There are three primary e - commerce business models that shape online commercial activity. Questions: a )...

Identify the lease classifications for lessors and the criteria that must be met for each classification.

What disclosures should be made by lessees and lessors related to future lease payments?

Identify and explain the different types of classifications for investment in equity securities.

Distinguish between the accounting treatment for available- for-sale equity securities and trading equity securities.

When is a debt security considered impaired? Explain how to account for the impairment of an available-for sale debt security.

Question 20(4 points)How much force is required to push open an interior swinging door?1)15 pounds2)10 pounds3)5 pounds4)2.5 pound

A Company owns 75% of B Company and 40% of C Company. B Company owns 40% of C Company. The following information was assembled at December 31, Year 7. Additional Information ¢ A Company...

Briefly outline how the presentation of assets and liabilities on the statement of financial position of a government differs from the presentation shown on the balance sheet of a typical business...

RAD Communications Ltd. (RAD), a Canadian public company, recently purchased the shares of TOP Systems Inc. (TOP), a Canadian-controlled private corporation. Both companies are in the communications...

A wholesaler lists an item for $48.75 less 20%. What additional special promotion discount must be offered to retailers to get the net price down to $36.66?

At its current price of $0.80 per share, Golden Egg Resources stock is down 73% from its price one year ago. What was that price?

A retailer is offered a regular discount of 25%, a further discount of 7.5% if she places an order exceeding $10,000 (at list prices), and another 5% promotional allowance (discount) for...