124 Section 12: Real Estate and Lending
Example 3: Again using the information given in example 1, what is the APR if
the mortgage fee is stated as 2 points plus $150?
Price of a Mortgage Traded at a Discount or
Premium
Mortgages may be bought and/or sold at prices lower (discounted) or higher (at a
premium) than the remaining balance of the loan at the time of purchase. Given
the amount of the mortgage, the periodic payment, the timing and amount of the
balloon or prepayment, and the desired yield rate, the price of the mortgage may
be found. It should be noted that the balloon payment amount (if it exists) occurs
coincident with, and does not include, the last periodic payment amount.
Information is entered as follows:
1. Press g and fCLEARG.
2. Key in the total number of periods until the balloon payment or
prepayment occurs; press n. (If there is no balloon payment, key in total
number of payments and press n.)
3. Key in the desired periodic interest rate (yield) and press ¼.
4. Key in the periodic payment amount; press P.
2
5. Key in the balloon payment amount and press M.
2
(If there is no balloon
payment, go to step 6.)
6. Press $ to obtain the purchase price of the mortgage.
Keystrokes (RPN mode) Display
gÂ
fCLEARG
30gA
360.00
Months (into n)
11.5gC
0.96
Percent monthly interest rate (into
i).
60000$
60,000.00
Loan amount (into PV).
P
–594.17
Monthly payment (calculated).
:$2b-
58,800.00
150-$
58,650.00
Effective mortgage amount (into
PV).
¼
0.98
Monthly interest rate (calculated).
12§
11.80
Annual percentage rate.
2.
Positive for cash received; negative for cash paid out.
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