Property appraisal is $2.8 an you believe you can borrow the funds based on an 80% LTV ratio.
Interest rate - 30 year fixed: 4.625%, 2 points required to close the loan.
Interest rate - 15 year fixed: 4.0%
Note: Fully amortized, monthly payments
Answer the following questions, show your calculations:
What is the initial monthly payment in each of the respective loans?
Compare the amount of interest which would be paid on the 30 year vs. the 15 year loan.
Which loan would you choose assuming there is 80% loan to value on the property? Explain.
What would the yield to the lender be on the 30 year fixed loan, considering the 2 points which must be paid?
What would the outstanding balance of the 15 year fixed loan be after 5 years?