You bought a house with price of $250,000, Your LTV

You bought a house with price of $250,000. Your LTV (loan-to-value ratio) is 80%. You choose the 30-year mortgage with interest rate 6%. Assuming the total transaction cost is $10,000.

Questions (5 points for each question)

1. What is your loan amount? What is your monthly payment? What will be the loan balance at the end of nine years?

2. What is the effective borrowing cost if the loan will be prepaid at the end of nine years?

3. In the monthly payment, how much you pay for the principle and how much you pay for the interest in the 1st and the 2nd month?

4. What will be your interest payments for the first 5 years (year 1 to year 5) and the last 5 years (year 26 to year 30)?

5. What is your annual percentage rate (APR)?

Problem 2 [25 points]:

You buy a house of $450,000 today. You put a down payment of 20% and borrow a fixed-rate mortgage of $360,000 with interest rate of 4% and 15 years. After 3 years, your house is appreciated to the value of $550,000 and market interest rate goes up to 6.5%. How much money will you make in book after 3 years?