Choose any mortgage with points from any site (please provide a url or copy the ad)....

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Choose any mortgage with points from any site (please provide a url or copy the ad). What is the interest rate on that mortgage? What is the APR? Why are they different? Assume that you pre-pay the mortgage after one month, what is the APR you will have paid? Assume that your mortgage forms a basis for a mortgage-backed security (any MBS is a pool of mortgages which are similar but hopefully not 100% correlated, but this question simplifies all of this). It is carved into an interest only and a principal only tranche. Show how the payments will be divided up for between the two tranches for the first three monthly payments. To make your life even simpler, assume that somehow only these three months paymets are securitized (possible, but unlikely). What will be the price of each tranche at issue assuming no pre-payment? Who wins and who loses if the mortgage pre-pays after one month, as in part a)? Please show a precise calculation. Choose any mortgage with points from any site (please provide a url or copy the ad). What is the interest rate on that mortgage? What is the APR? Why are they different? Assume that you pre-pay the mortgage after one month, what is the APR you will have paid? Assume that your mortgage forms a basis for a mortgage-backed security (any MBS is a pool of mortgages which are similar but hopefully not 100% correlated, but this question simplifies all of this). It is carved into an interest only and a principal only tranche. Show how the payments will be divided up for between the two tranches for the first three monthly payments. To make your life even simpler, assume that somehow only these three months paymets are securitized (possible, but unlikely). What will be the price of each tranche at issue assuming no pre-payment? Who wins and who loses if the mortgage pre-pays after one month, as in part a)? Please show a precise calculation.

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Step 12 A Answer I selected this Bank of America 30year fixed rate mortgage httpswwwbankofamericacom... View the full answer