Sharp EL733A EL-733A Operation Manual - Page 32

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a month. Is it likely that this person will be able to find the financing to cash you out? Solution: If an institution were to loan your prospective buyer the cash, this is the situation that institution would be looking at (from the lenders perspective). PMT = 700.00 t2 t3 t 1=? PV = - 70'000 FV = 0 358 t 359 t 360 t 0=30 x 12 Would the return (or interest rate) be high enough in this case? If the calculated rate is about what the market is currently bearing, you may have a buyer for your house. First, make sure your calculator is out of BGN mode by pressing BGN to make the BGN indicator turn off. Then press: (Mode: FIN) 30 j2ndF] VIZ E) 0 E 70'000 +1- E 7001 Result: 0.97 This is the monthly rate. To compare it with the advertised rates multiply by 12 to get a nominal APR of 11.63%. At the time of this writing, that is a reasonable rate on a mortgage (perhaps even a little high) so your prospective buyer will likely be able to get financing. "POINTS UP FRONT" (PREPAID FINANCE CHARGES Nowadays, it is almost the norm to have to pay some finance charges up front in order to secure a loan, especially a mortgage. In the U.S., the FHA (Federal Housing Act) rates are well known for their dependence on the "points" that you are willing to pay up front. These "points" are percentage points. The more percentage points of the borrowed money you are willing to pay at the onset of the loan, the lower the rate will be that is used to calculate your payment. Prepaid finance charges or "points up front" have the effect of increasing the actual interest rate that is paid on the borrowed money. These prepaid finance charges reduce the net amount of money borrowed up front, without reducing the payment. This is not the same as a "down payment," which reduces both the money borrowed and the payment amount.

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a
month.
Is
it
li
kely
that
this
person
will
be
able
to
fi
nd
the
fi
nancing
to
cash
you
out?
Solution:
If
an
institution
were
to
loan
your
prospective
buyer
the
cash,
this
is
the
situation
that
institution
would
be
looking
at
(from
the
lenders
perspective).
PMT
=
700.00
FV
=
0
t
2
t
3
t
1
=
?
PV
=
-
70'000
358
t
359
t
360
t
0=30
x
12
Would
the
return
(or
interest
rate)
be
high
enough
in
this
case?
If
the
calculated
rate
is
about
what
the
market
is
currently
bearing,
you
may
have
a
buyer
for
your
house.
First,
make
sure
your
calculator
is
out
of
BGN
mode
by
pressing
BGN
to
make
the
BGN
indicator
turn
off.
Then
press:
(Mode:
FIN)
30
j2ndF]
VIZ
E)
0
E
70'000
+1-
E
7001
Result:
0.97
This
is
the
monthly
rate.
To
compare
it
with
the
advertised
rates
multiply
by
12
to
get
a
nominal
APR
of
11.63%.
At
the
time
of
this
writing,
that
is
a
reasonable
rate
on
a
mortgage
(perhaps
even
a
li
ttle
high)
so
your
prospective
buyer
will
likely
be
able
to
get
fi
nancing.
"POINTS
UP
FRONT"
(PREPAID
FINANCE
CHARGES
Nowadays,
it
is
almost
the
norm
to
have
to
pay
some
finance
charges
up
front
in
order
to
secure
a
loan,
especially
a
mortgage.
In
the
U.S.,
the
FHA
(Federal
Housing
Act)
rates
are
well
known
for
their
dependence
on
the
"points"
that
you
are
willing
to
pay
up
front.
These
"points"
are
percentage
points.
The
more
percentage
points
of
the
borrowed
money
you
are
willing
to
pay
at
the
onset
of
the
loan,
the
lower
the
rate
will
be
that
is
used
to
calculate
your
payment.
Prepaid
fi
nance
charges
or
"points
up
front"
have
the
effect
of
increasing
the
actual
interest
rate
that
is
paid
on
the
borrowed
money.
These
prepaid
finance
charges
reduce
the
net
amount
of
money
borrowed
up
front,
without
reducing
the
payment.
This
is
not
the
same
as
a
"down
payment,"
which
reduces
both
the
money
borrowed
and
the
payment
amount.