question archive A 15-year residential mortgage loan was issued with a monthly payment of $1,520, where the lender's yield is 7
A 15-year residential mortgage loan was issued with a monthly payment of $1,520, where the lender's yield is 7
Subject:FinancePrice: Bought3
A 15-year residential mortgage loan was issued with a monthly payment of $1,520, where the lender's yield is 7.25%, while the effective cost of borrowing (EBC) is 7.55%.
a. Calculate the loan amount that is effectively disbursed by the lender.
b. Calculate the net loan proceeds that are effectively received by the borrower?
c. From your answers in (a) and (b), discuss the reasons for the possible difference/similarity between the loan amount received by the borrower and that which is disbursed by the lender.
