Description
Deliverable Length: 800–1,000 words
Find 5 different online mortgage lenders, such as https://www.lendingtree.com/
From these 5 lenders, find the following rates, assuming the mortgage payments are made monthly:
- 10-year (if available) for fixed-rate mortgage
- 15-year (if available) for fixed-rate mortgage
- 30-year for fixed-rate mortgage
- What are 2 things about the sample Web site given above that could be applicable to a consumer or investor?
- Present the rates in a table. List the quoted rate and EAR rate, the lender, and the maturity of the loan. Show your work for each calculation.
- What is 1 mistake people make when calculating their mortgage payments? Explain your answer.
- Based solely on the EAR, which rate is the cheapest? Does this make sense?
- Why do the different lenders have different rates?
- Is the difference in rates going to make a huge impact on the cost to the homebuyer? Explain your answer.
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Explanation & Answer
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Running Head: TIME VALUE OF MONEY
1
Time Value of Money
Name
Institution
Date
TIME VALUE OF MONEY
2
Time Value of Money
To better understand time value for money, data on mortgage interest rate was collected
from a sample of five online mortgage lenders. The data included interest rate for a 15 year fixed
mortgage and a 30 year fixed mortgage. The five selected online mortgage lenders were Lending
Tree, Quicken Loans Inc., AmeriSave Mortgage Corporation, SunTrust, and PennyMac. The
different interest rate was then converted to effective annual rate (EAR).
In addition to calculating the EAR, this paper also discusses the different rates and these
rates impact on a home buyer. It also discusses the one mistake that almost every home buyer
makes when determining their mortgage payment. Finally, the paper will outline the reason behind
different mortgage rates by different lenders and also the cheapest mortgage based solely on EAR.
The different interest rates for the five lenders together with their effective annual rate are
summarized in the table below.
Lender
15-year fixed mortgage rate
Monthly
EAR
Monthly...
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