Based on the information provided, choose the correct statement below. They are both for $250,000 loans for 1 year terms. Oleg has a mortgage commitment with a rate of 6.5% compounded annually, not in advance. Which of the following formulas would you use to determine the total amount owing on a loan of $100,000 at 3% compounding semi annually for a term of 3 years? a) P x i x N b) P x (1 + i) n c) P x (1 + i/m) mn d) m Steven has a mortgage commitment with a rate of 6.5% compounded semiannually, not in advance. a) Monthly compounding b) Semi Annual compounding c) Annual compounding d) Quarterly compounding 11. Interest rates with this compounding frequency are known as effective rates, as, in effect, they express how much a borrower will pay in interest over one year. a) Interest Rates b) Effective Interest Rates c) Stated Interest Rates d) Equivalent Interest Rates 10.
Which of the following terms can be defined by saying for the same amount borrowed, over the same period of time, the same amount is owed at the end of that period. What is the average mortgage rate for the two mortgages (rounded to one decimal place)? a) 5.9% b) 6.1% c) 6.3% d) 6.5% Copyrightĩ 9. Gail wants to buy a property with a first mortgage of $395,000 at 7.25% compounded semi annually not in advance, and a second mortgage of $200,000 at 3.95% interest compounded semi annually, not in advance. What is the average mortgage rate for the two mortgages (rounded to one decimal place)? a) 5.0% b) 5.3% c) 5.5% d) 5.7% 4. Laurel wants to buy a property with a first mortgage of $626,000 at 5% compounded semi annually, not in advance, and a second mortgage of $130,000 at 6.5% interest compounded semi annually, not in advance. According to the federal interest act, blended payment loans can only compound interest: a) Yearly only b) Half yearly only c) Yearly or half yearly, not in advance d) Yearly or half yearly, in advance 3. a) Less b) More c) Same d) None of the above 2. When no other factors are changed, the more often you compound interest, the expensive the loan is for the borrower. Without considering penalties and/or fees, and focusing just on the interest amounts, which option will effectively provide Janine a lower overall interest rate? Step 1 Calculate total financing required Step 2 Step 3 Step 4 * is it likely that a traditional lender will be able to offer Janine that new mortgage of $455,000? Why? / Why Not? Copyrightħ Module 4 Mini Quiz 1. Janine s mortgage broker can get her a second mortgage for a rate of 4.49% compounded semi annually, not in advance. Keep her current mortgage as is, and get a second mortgage for just the additional funds needed. Janine s lender will refinance the mortgage and offer her a new rate of 3.99% compounded semi annually, not in advance. Get a new mortgage for the total amount ($272,000 + $183,000 = $455,000) at today s current rates. Janine is faced with 2 options: Option 1: Option 2: Refinance her existing mortgage. She has determined that she will need a total of $183,000 to make this happen. She wants to pay off all her credit cards and lines of credit, repair the roof and make an investment into her RRSP.
Janine has decided she needs to tap into the equity of her home and clean up some of her finances. She has an outstanding mortgage of $272,000 with a rate of 3.25% compounded semi annually not in advance.
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(View Full Schedule) CopyrightĦ Mortgage Averaging Practice Question Janine currently owns a home that was recently appraised at a value of $499,000. Click on Complete Amortization Schedule to see exactly how each payment is allocated to principal and interest. $295,000 2 year 2.99% 20 year Monthly - Click on Compute to see the payment amount. (View Full Schedule) Mortgage Amount Term Interest Rate Amortizati on Frequency Payment $ 3. $665,000 3 year 3.25% 25 year Bi Weekly - Click on Compute to see the payment amount. (View Full Schedule) Mortgage Amount Term Interest Rate Amortizati on Frequency Payment $ 2. $325,000 5 year 5.75% 20 years Weekly - Click on Compute to see the payment amount. > Mortgage Industry > Resources > Mortgage Calculators > Prepayment Calculator Mortgage Amount Term Interest Rate Amortizati on Frequency Payment $ 1. 3 Determining Payments Practice Question Use the CAAMP online payment calculator as a group (or on your own at home) to determine the mortgage payment amounts below.
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