Question

Assume a borrower wants to borrow $275,000 for 30 years at 4.50 %. first two monthly payments for a CAM and for a CPM? (4) 14. What are the a. The first two monthly payments for the CPM are $362.13 per month and for the CAM are $0,766.75 for the first month and $0,766.75 for the second month. b. The first two monthly payments for the CPM are $1,393.38 per month and for the CAM are $1,795.14 for the first month and $1,788.41 for the second month. c. The first two monthly payments for the CPM are $12,375.00 per month and for the $1,795.14 for the first month and $1,792.27 for the second month. d. The first two monthly payments for the CPM are $1,393.38 per month and for the CAM are $1,795.14 for the first month and $1,792.27 for the second month. e. The first two monthly payments for the CPM are $9,709.12 per month and for the CAM are $1,795.14 for the first month and $1,788.41 for the second month. CAM are What would be the balance on a 30 year CPM for $375,000 at 5.25% at the end of the 10th year? (4) 15. $193,003.17 a. $307,306.05 $235,518.27 d. $326,718.73 e. $350,150.83 b. c. Use the following to answer questions 16-19: Ed wants to buy a property for $320,000 and wants a CPM loan for 80%. A lender indicates the loan can be obtained for 30 years at 5.5% with an origination loan fee of $1,200 and 2 points. 16. How much will the lender actually disburse? (3) a. $249,680 b. $254,800 c. $256,000 d. $248,400 e. $312,400 un
answer all 3 please

Answer 1

14. CPM ( Constant Payment Mortgage)

In this constant payment is calculated over the period of the loan

Total Loan = $275000

Time Period = 30 years or 30*12 = 360 months

Interest Rate = 4.50% annually or 4.50/12 = 0.375 % monthly

Formula

Let monthly payment be X

275000 = [(X/0.00375)*(1-(1/(1.00375)³⁶⁰))]

X = (275000*0.00375)/(1-(1/(1.00375)³⁶⁰))

X = 1031.25/0.7401 = $1393.38

CAM ( Constant Amortization Mortgage )

In this Principal each month remain constant and interest for the period is added

Principal = 275000/360 = $763.88 per month

For First Month

Interest = 275000*0.00375 = $1031.26

Payment for first month = 763.88 +1031.26 = $1795.14

For Second Month

Interest = (275000-763.88)*0.00375 = 274236.12*0.00375= $1028.39

Payment for second month = 763.88 +1028.39 = $1792.27

hence answer is d