The Value Of Loan Payment Essay - 928 Words

Annuity Due – an annuity due in which all the cash flow occurs at the beginning of each period ( Titman et al, 2014,p. 167). Annuity dues are payment such as apartment rent payment at the beginning of the period. The outstanding of the loan - information is helpful beyond the professional front. The outstanding interest rate can be calculated by using the same formula as a present value with a slight variation. The present outstanding value of the loan = PMT [1- 1/ (1+ annual rate of interest/m) ^number of years *m / annual rate of interest/m]. Here, m is a number of times compounding occurred in the year. Note – The book â€Å"Financial management† suggests the balance amount of loan one owes must be equal to the present value of the remaining loan payment (Titman et all, 2014). The information regarding the calculation of loan and outstanding loan gave us a fair idea about how the loan financing occur. Another important aspect learned is how the principle and i nterest affect the amount of any loan. This knowledge also brought other factors into consideration such as refinancing mortgage loan cost. The refinancing cost involves distinct hidden costs such as appraisal fee, legal fee, origination fee, and application. Hence, if one plan to refinance the loan by getting attracted to lower interest rate. The refinance must put some extra money aside to pay the refinancing cost. Future Value of Annuity payment due – PMT [(1+ i) ^n -1 / i] (1+ i). Discounting annuity due -Show MoreRelatedVisual Basic for Applications and Function Essay1169 Words   |  5 PagesPMT function returns the payment amount for a loan based on an interest rate and a constant payment schedule. †¢ The syntax for the PMT function is: †¢ PMT( interest_rate, number_payments, PV, [FV], [Type] ) †¢ †¢ †¢ †¢ interest_rate is the interest rate for the loan. number_payments is the number of payments for the loan. PV is the present value or principal of the loan. FV is optional. It is the future value or the loan amount outstanding after all payments have been made. If this Read MoreHome Insurance Case : The Premium For PMI Insurance727 Words   |  3 PagesThe cost The premium for PMI insurance varies according to the size of the loan, and the down payment made, but is typical around one percent of the loan amount. The cost is not based on the lender’s credit score but is based on the size of the mortgage and the amount of the down payment. When it is necessary If a home buyer cannot afford to make a large down payment, typically at least twenty percent, to purchase a home, purchasing PMI insurance allows the buyer to pay as little as five percentRead MoreEssay on Solving the Foreclosure Crisis 1305 Words   |  6 PagesThe frequency of foreclosure in our nation today is dangerously high. The strain from the recent economic downturn has put many families and individuals in a financial chokehold preventing them from being able to make their monthly mortgage payments. Consequently, many of these people feel they’ve punched a one-way ticket to foreclosure. With all these homes being foreclosed on, we face a very real crisis. The best way to solve this foreclosure crisis is preventing homes from foreclosing one houseRead MoreWhat Is Private Mortgage Insurance ( PMI )?1096 Words   |  5 PagesIn the process of applying for a home loan, a borrower is typically required to make a down payment of at least twenty percent of the homes purchase price. When a borrower is unable to provide the required percentage, a PMI payment is required. What is Private Mortgage Insurance (PMI)? Also known as Primary Mortgage Insurance, PMI is the lenders insurance in the event that you default on your mortgage loan. It is a financial protection plan that seeks to protect the lender in the event thatRead MoreThe Management Of Chicago Bank1153 Words   |  5 Pages â€Æ' Contents Abstract 2 Introduction 3 Proposal 4 Loan 4 Amortization 5 Balloon Payment 5 Loan-to-Value 6 Abstract Consortium Bank - â€Å"A subsidiary bank created by numerous banks. A consortium bank is created to fund a specific project (such as providing affordable homeownership for low- and moderate-income home buyers) or to execute a specific deal (such as selling loans in the loan syndication market)†. (Investopedia, 2009) The Consortium generally strengthens the individual bank’sRead MoreSolution to the Foreclosure Crisis: Lending Laws1518 Words   |  7 Pagesbe taken to repair our nation’s foreclosure problem. We first need to reduce the risk of the loan to the lender, and then we need to increase the consumer’s buying power, and also work to make the foreclosure process more efficient. To come to any resolution at all we first need to discover how we got to where we currently are. Real estate values and how they are set must be well understood. The value of a home is determined by how much an individual is willing to pay for it at a given time. SinceRead MoreThis Model Predicts That White Pre-Retirees Have A Significantly1137 Words   |  5 Pagesfinancial assets is positive, yet lessens as the value of income increases. For example, a one percent increase in income is predicted to increase financial assets by $2,770, with this amount diminishing as income continued to increase. In this study, pre-retirees were not expected to accumulate financial assets while repaying 401(k) loans, as some plans may limit participation while a loan is outstanding. Therefore, pre-retirees with qualified plan loans were not expected to take full advantage of employerRead MoreMortgage Options Analysis1161 Words   |  5 PagesAfter shopping around for a mortgage loan, you found that the following two deals from the Mortgage One Company are very attractive: Option 1: A 15-year fixed rate mortgage with no point and an APR of 5%, compounded monthly. Option 2: A 15-year fixed rate mortgage with two points and an APR of 4.5%, compounded monthly. The closing costs (not including the points) for the two loans are identical. According to the law, the interests on your mortgage payments are tax deductible. In fact, at theRead MoreGeneral Maths Financial Maths1145 Words   |  5 PagesFinancial Mathematics Credit and Loans: Simple Interest and Flat Rate Loans: A flat rate loan is one where flat or simple interest is charged on an amount borrowed or principal for the term of the loan. Interest is always charged on the full amount of the loan. I = Prn P = principal r = rate per period expressed as a decimal n = number of periods E.g. Phil borrowed $4000 for three years at 8%p.a. (per annum) (flat rate) a) What is his interest? b) What is the total repaid? c)Read MorePros And Answers : Choosing The Best Loan?917 Words   |  4 PagesChoosing the best loan Fixed rate / variable rate | Amortization / interest only | Mortgage Term Options | Down payment options When you start looking for a loan program, it is important to consider the following issues: †¢ The stability of your payment. †¢ Your ability to qualify for the loan amount. †¢ How long do you plan to live in the house? †¢ If your income is stable or increasing. †¢ The possibility of significant changes in interest rates. †¢ The amount of the initial expenses. †¢ If you can comfortably