Assume an elderly person owns a $350,000 home that is free and clear of mortgage debt. A
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Question:
Assume an elderly person owns a $350,000 home that is free and clear of mortgage debt. A lender has agreed to a $350,000 reverse mortgage with monthly payments. The loan term is 15 years.The annual interest rate is 6%.
Questions:
1.What is the interest charged in the 1stmonth?
2.If the elderly passes away in 5 years (60 months), what will be the loan balance?
3.How much of the loan balance at the end of 60th month represents the interest portion?
4.Suppose that there is $2,000 origination cost associated with the reverse mortgage and the elderly passes away in 5 years (60 months), what is the annual effective cost of the loan to the senior?
Related Book For
Real Estate Principles A Value Approach
ISBN: 978-0077836368
5th edition
Authors: David C Ling, Wayne Archer
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