mortgage loans--fundamentals参考.ppt

Chapter 14 Loan Amortization;Mortgage 14.3 mortgage loans--fundamentals Basic concepts and definitions A mortgage loan is a loan secured by some physical property. The face value of the mortgage is the original principal amount that borrower promises to repay. In legal language, the borrower is called the mortgagor and the lender is called the mortgagee. The term of a mortgage loan is the length of time from the date on which the loan is advanced to the date on which the remaining principal balance is due and payable. Calculating the payment and the balance Mortgage interest rates advertised by most financial institutions are semiannually compounded rates. The majority of mortgages require monthly payments. The payments for the initial term are calculated as though the interest rate is fixed for the entire amortization period. The principal balance on the mortgage loan after any payment may be calculated using either the prospective method or the retrospective method. The latter is preferable. The principal and interest components of any mortgage payment may be calculated as described in section 14.1 Particularly when the amortization period is 20 or 25 years, the payment in the first few years are primarily interest. Example A $50,000 mortgage loan is written with a 20-year amortization period, a 3-year term, and an interest rate of 9.5% compounded semiannually. Payments are made monthly. Calculate: a, the balance at the end of the 3-year term. b, the size of the payments upon renewal for 5 years at 10.5% compounded semiannually (with the loan maintaining its original 20-year amortization) Solution: j=9.5% compounded semiannually i=j/m=4.25% payment interval=1 month p=(1+i)c-1=0.776438317% An=$50,000 term of amortization=20 years n=12*20=240 Compute the payment size j=10.5% compounded semiannually i=j/m=5.25% payment interval=1 month p=(1+i)c-1=0.856451515% the balance after 3-year is $47,026.83. The remaini