- Budgeting
- Cash Management
- Consumer and Mortgage Loans
- Introduction
- Understand How Consumer Loans Can Keep You from Achieving Your Goals
- Explain the Characteristics and Costs of Consumer Loans
- Explain the Characteristics and Costs of Mortgage Loans
- Understand How to Select the Least Expensive Sources for Consumer Loans and How to Reduce the Costs of Borrowing
- Summary
- Assignments
- Debt and Debt Reduction
- Time Value of Money 1: Present and Future Value
- Time Value of Money 2: Inflation, Real Returns, Annuities, and Amortized Loans
- Insurance 1: Basics
- Insurance 2: Life Insurance
- Insurance 3: Health, Long-term Care, and Disability Insurance
- Insurance 4: Auto, Homeowners, and Liability Insurance
- The Home Decision
- The Auto Decision
- Family 1: Money and Marriage
- Family 2: Teaching Children Financial Responsibility
- Family 3: Financing Children’s Education and Missions
- Investments A: Key Lessons of Investing
- Investments B: Key Lessons of Investing
Case Study #7 Answers
A. After the negative amortization limit is hit, he must now amortize the loan over 20 years, instead of 30. His new loan amount is not $300,000, but $375,000 (300,000 * 125%) due to the fact he did not pay enough to even cover interest payments:
PV = -375,000, I=7.0%, P/Y=12, N= 240, PMT = ?
PMT = $2,907.37
PMT = $2,907.37
B.His minimum payment was $1,317, and his new payment is $2,907.
It is a 121% increase over the minimum payment period.
