User Manual

If you, as a lender, know the yield on the entire transaction, and you wish to
obtain the payment amount on the wrap-around mortgage to achieve this yield,
use the following procedure. Once the monthly payment is known, the borrower's
periodic interest rate may also be determined.
1. Press the and press CLEAR .
2. Key in the remaining periods of the original mortgage and press
.
3. Key in the desired annual yield and press
.
4. Key in the monthly payment to be made by the lender on the original mortgage and press
.
5. Press
.
6. Key in the net amount of cash advanced and press
.
7. Key in the total term of the wrap-around mortgage and press
.
8. If a balloon payment exists, key it in and press
.
9. Press
to obtain the payment amount necessary to achieve the desired yield.
10. Key in the amount of the wrap-around mortgage and press
to obtain the
borrower's periodic interest rate.
Example 3: Your firm has determined that the yield on a wrap-around mortgage
should be 12% annually. In the previous example, what monthly payment must
be received to achieve this yield on a $200,000 wrap-around? What interest rate
is the borrower paying?
Keystrokes Display
CLEAR
200
12
Number of periods and monthly interest rate.
1051.61
74990
-165,776.92 Present value of payments plus cash advanced.
240
129963.35
1,693.97 Monthly payment received by lender
200000
9.58 Annual interest rate paid by borrower.