John wants to buy a property for $105,000 and wants an 80% loan. The lender indicates that a fully amortizing loan can be obtained for 30 years at 12% MEY, with loan origination fees of $3,500. How much will the lender actually disburse?

John is looking to purchase a $105,000 property and needs 80% of the loan. Loan origination fees are $3,500 and a 30 year fully amortizing mortgage at 12% Monthly Effective Yield (MEY) is offered by the lender. In order to calculate the actual amount that the lender will disburse we need to first know the total money John has requested from the bank.

The amount requested = Purchase price x Loan (%) = $105,000 x 0.8 = $84,000

Add the charges associated with obtaining a loan.

The total amount requested plus fees = $84,000 + $3,500 = $87,000.

We can now calculate the amount of money John will receive from his lender.

Total Disbursed by Lender= (Total Amount Requested – Fees) ÷ 1-(MEY x # Of Years/12)⁽¹⁾
= ($87,500 – 3 , 500) / 1- (0.12 *30/12 )
= $(84 , 000 / 0.88)
= $95 , 455 .45

According to this calculation, the total amount of money that would have been disbursed at closing by the lender is approximately $95,455.45.⁽²⁾. This will be the total of both principal payments and interest, which fluctuate with time according to market rates.⁽³⁾. This calculation excludes any other fees or expenses associated with getting a mortgage, such as title insurance or appraisal costs. It is important that borrowers research their potential loans thoroughly before they commit funds to ensure they know exactly what their responsibilities are when their mortgage period ends.⁽⁴⁾.