👤
Answered

Suppose you are thinking about purchasing a small office building for $1,500,000. The 30 year fixed rate mortgage that you have arranged covers 80% of the purchase price and has an interest rate of 8%. Assume you were to default and go into foreclosure in year 10 of this loan. If the lender was able to sell this property for $700,000, how much does the lender stand to lose in the absence of pmi?.

Answer :

If the lender was able to sell this property for $700,000, then the amount the lender stand to lose in the absence of PMI is $352,696.

What is a mortgage ?

Mortgages can be regarded as a type of loan that can be used to purchase or maintain a home, a plot of land, or any real estate asset. The borrower agrees to pay the lender on a regular basis, typically in the form of a number of installments that are divided into principal and interest. The asset then serves as collateral for the loan.

To solve the question :

Mortgage  amount = 80% ×1,500,000

= $1,200,000

Mortgage  amount = 1,200,000

Term = 30 years× 12 months

= 360 months

MP  = $8,805.17

Outstanding loan= $1,052,696

Hence,

Loss amount = Outstanding loan - Price of the property

= $1,052,696 - $700,000

Therefore, the loss amount is $352,696

To know more about, mortgage, visit :

https://brainly.com/question/8084409

#SPJ4

Go Teaching: Other Questions