Tim Schneider
Member
- Joined
- Feb 8, 2007
- Professional Status
- Certified Residential Appraiser
- State
- Wisconsin
I am working on a report where the borrower is getting a special loan from the city to help with down payment. The loan is for $4000, and there is no interest for 5 years, then it goes to 2% interest amoritzed over 6 years. I am trying to determine the present value of this financial assistance. I came up with:
pv of $4,000 in 5 years at the normal mortgage rate (6.625% in this case)= $2,901, which is financial assitance of $1,098
pv of a $4,000 loan at 2% vs. 6.625% over 6 yrs= $3,048, financial assistance of $951
Total value of special loan = $2,049
pv of $4,000 in 5 years at the normal mortgage rate (6.625% in this case)= $2,901, which is financial assitance of $1,098
pv of a $4,000 loan at 2% vs. 6.625% over 6 yrs= $3,048, financial assistance of $951
Total value of special loan = $2,049