Tom purchases a property and finances it with a Graduated Payment Mortgage (GPM) loan for 200,000 at
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- Tom purchases a property and finances it with a Graduated Payment Mortgage (GPM) loan for 200,000 at j2=7% (2 is compounding frequency) His monthly payment for the first year will be 1000; the annual growth rate for the payments will be 7% for each of the first five years.
- (a) What is the monthly payment on the loan during the 4th year?
- (b) What is the OSB on the loan at the end of 2nd year?
- (c) Suppose instead of the GPM, he obtains a standard level payment mortgage at the same interest rate amortized over 30 years. Under this scenario, what would be the answers for (a) & (b)? How would your new answers compare to those in (a) & (b)?
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
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