MATH CLASS 5

GOBC Real Estate • Mortgage Notes

• PIMP
• PIMPO

www.GOBCrealestate.com
 MATH CLASS 5- PIMPO Questions
PIMP – Vendor supplies the mortgage for a purchaser
1. Agreement for sale (not in PIMPs or PIPIs; rent-to-own from ‘From Contract to Completion’ chapter)
2. Vendor take-back mortgage
3. Assumed mortgage

HINTS:
• Questions ask for the MARKET VALUE OF A MORTGAGE (MVM/PIMP) or the MARKET VALUE OF
AN OFFER (MVO/PIMPO).
• These questions have: TWO INTEREST RATES in them, and the answers will be expressed in $
dollar amounts $.
• They refer to a vendor take-back mortgage or an assumed mortgage.

TIMELINE TYPES for PIMP-O’s and PIPI’s:

1. Amort = Term; no AGO DO NOTHING We are happy !

2. Amort = Term; with AGO Nuggets YL#N only! Do NOT press FV
3. Amort ≠ Term; no AGO Nuggets + Fries (Term) T#N Press FV
4. Amort ≠ Term; with AGO Nuggets + Fries (Term) T#N Press FV
Plus Nuggets (Term minus ago = years left, YL) YL#N only! Do NOT press FV

PIMPO – 5 Steps:

1) PMT = Find the payment, round it up, plug it back in

Market Value of Mortgage
2) I = Timeline ---> 4 types listed above; = MVM = PIMP

3) M = Mortgage – 2nd mortgage rate; do 2nd NPEPN – if asked for MVM, you
are being asked to value
4) PV = Push PV (MVM) ONLY the mortgage
monies (PV) supplied by
the vendor
5) O = Offer – Add cash??? (MVO)
Market Value of Offer
= MVO = PIMPO

– if asked for MVO, you

need to ADD THE CASH

©2022 GOBC Training Ltd 66

 MATH CLASS 5- PIMPO Questions
Amort ≠ Term, no AGO

1. An offer of $235,000 is accepted, comprised of a cash down payment of $85,000 subject to a vendor supplied mortgage of
$150,000 at 14% per annum, compounded semi-annually. The loan has an amortization period of 25 years, a term of five years
and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 19% per annum, compounded
semi-annually. Mortgage payments are to be rounded up to the next higher dollar. The market value of the offer will be:

(1) $127,385.13 (2) $199,309.79 (3) $235,000.00 (4) $212,385.13

N J =
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV
__#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV
__#NOM
#PYR
__#PYR
M __ #EFF
__#PYR
P __ #NOM

2. An offer of $435,000 is accepted, comprised of a cash down payment of $65,000 and a vendor-supplied mortgage loan of
$250,000 at 3% per annum, compounded semi-annually. The loan has an amortization period of 15 years, a term of 2 years,
and calls for monthly payments rounded up to the next higher dollar. Market rates of interest for equivalent mortgages are
currently 8% per annum, compounded semi-annually. The market value of the offer will be:

(1) $250,112.95 (2) $315,112.95 (3) $235,000.00 (4) $293,586.61

N J =
__#NOM
__#NOM
IYR Pmt = __#PYR
__#PYR
__#EFF
PV __#PYR
__#EFF
__#NOM A=
T=
PMT P __#PYR Ago =

FV I ________T_______ __#NOM A=
#N, press FV
#PYR __#NOM T=
__#PYR
M __ #EFF Ago =
__#PYR
P __ #NOM
©2022 GOBC Training Ltd 67
O
 MATH CLASS 5- PIMPO Questions
3. A developer is offering a mortgage loan of $102,000 at 19.5% per annum, compounded semi-annually, on each of sixteen
units in a condominium development. The mortgages have monthly payments, five-year terms and twenty-year amortization
periods. Each unit is priced at $130,000 and the units have been selling over the past seven months. Even with a recent
decrease in interest rates (currently at J2 = 18%), the property has attracted the attention of a purchaser who has made a full
price offer and applied for the developer's financing on one of the condominium units. The market value of the offer is:

(1) $134,661.86 (2) $132,975.17 (3) $130,000.00 (4) $106,661.86

N J = __#NOM
__#NOM
IYR Pmt = __#PYR
__#PYR
__#EFF
PV __#EFF
__#PYR
__#NOM A=
__#PYR T=
PMT P Ago =
__#NOM A=
FV I ________T_______
#N, press FV T=
__#NOM
#PYR Ago =
__#PYR
M __ #EFF
__#PYR
P __ #NOM

__#NOM
4. An offer of $235,000 is accepted, comprised of a cash down payment of $55,000 and a vendor supplied mortgage loan of
$180,000 at 14% per annum, compounded semi-annually. The loan has an amortization
__#PYR period of 25 years, a term of 5 years
and calls for monthly payments. Market rates of interest for equivalent mortgages are currently 19% per annum, compounded
semi-annually. Mortgage payments are to be rounded up to the next higher dollar. The market value of the offer will be:
__ #EFF
(1) $152,861.21 (2) $235,000.00 (3) $207,861.21 (4) $192,158.76
__#PYR
N J =
__ #NOM
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV
__#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV
__#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

©2022 GOBC Training Ltd 68

O
 MATH CLASS 5- PIMPO Questions
Amort = Term, no AGO
5. Susan Jones has offered to purchase a house from a vendor who is willing to provide partial financing. Her offer is a $75,000
down payment plus a mortgage of $125,000 at 14% per annum, compounded semiannually. The loan is to be fully amortized
with level monthly payments over twenty years. What is the market value of this offer if the market rate for similar mortgage
loans is 22.5% per annum, compounded semi-annually?

(1) $ 160,241.42 (2) $ 258,301.80 (3) $ 83,539.11 (4) $ 158,539.11

N J =
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV
__#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

6. An appraiser has located a comparable where the sale price was $220,000, comprised of $105,000 cash and a $115,000
vendor take-back mortgage written at 3.5% per annum, compounded semi-annually, with monthly payments sufficient to fully
amortize the loan over 20 years. Assuming that the market rate for similar financing is 5% per annum, compounded semi-
annually, what should the appraiser regard as the sale price of the house? (Round answer to the nearest $100).

(1) $101,300 (2) $220,000 (3) $206,300 (4) $192,000

N J =
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV
__#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

©2022 GOBC Training Ltd O 69

 MATH CLASS 5- PIMPO Questions
Amort ≠ Term, with an AGO
7. Three years ago Jim bought a house at which time he arranged a mortgage in the amount of $120,000. The loan was written
at a rate of 9.75% per annum compounded semi-annually, with a 5-year term, 25-year amortization period and monthly
payments. Jim has just received an offer from Alice to buy his house. Alice offers to provide $25,000 cash and to assume the
existing financing for the remainder of the term. If current lending rates for 2-year term mortgages are 11.75% per annum,
compounded semi-annually, what is the market value of Alice's offer?
(1) $111,508.31 (2) $112,055.09 (3) $150,000.00 (4) $137,055.09

N J =
__#NOM
__#NOM
__#PYR
IYR Pmt = __#PYR
__#EFF
__#EFF
__#PYR
__#PYR
PV __#NOM
__#NOM A=
A =
T
T==
PMT P Ago =
Ago =

FV I ________T_______
#N, press FV __#NOM
__#NOM
#PYR __#PYR
__#PYR
M __ #EFF
__ #EFF
__#PYR
__#PYR
__ #NOM
#NOM
P __

8. Three years ago Jim bought a house at which time he arranged a mortgage for $120,000. The loan was written at a rate of
6.75% per annum compounded semi-annually, calling for monthly payments of $822.06 and an outstanding balance of
$108,904.49 due at the end of the 5-year term. Jim has just received an offer from Alice to buy his house. Alice's offer consists
of $25,000 cash and assumption of the existing financing for the remainder of the term. If current lending rates for 2-year term
mortgages are 8.75% per annum, compounded semi-annually, what is the market value of Alice's offer?

(1) $97,335.06 (2) $109,829.02 (3) $122,335.06 (4) $134,829.02

N J =
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV __#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

©2022 GOBC Training Ltd O 70

 MATH CLASS 5- PIMPO Questions
9. Two years ago, Erma bought a beautiful lakefront estate for $750,000. She made the purchase with a $250,000 down
payment and financed the remainder with a mortgage loan written at a contract rate of J2= 12.5%, amortized over 20 years
with monthly payments, and with a five-year term. She now wants to sell the property and Ernie has made an offer of a
$240,000 down payment and the assumption of the mortgage payments. If the current market interest rate for similar
mortgages is J4 = 10%, what is the market value of Ernie's offer?
(1) $ 754,542.06 (2) $ 800,099.28 (3) $ 783,126.30 (4) $ 514,542.06

N J =
__#NOM
__#PYR
IYR Pmt =
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV __#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

10. Bill Black purchased a home two years ago at which time he arranged for a mortgage in the amount of $350,000 amortized
over 20 years with a 5-year term and monthly payments. The interest rate on the mortgage was 6% per annum, compounded
semi-annually calling for monthly payments of $2,493 and an outstanding balance of $296,762.89 due at the end of the 5-year
term. Bill has just received an offer on his house from Mark. Mark's offer consists of $50,000 cash and assumption of the
existing mortgage for the remainder of the term. If current market rates for 3-year term mortgages are 3.5% per annum,
compounded semi-annually, what is the market value of Mark's offer?
(1) $352,537.42 (2) $449,911.72 (3) $399,223.72 (4) $402,537.42

N J =
__#NOM
__#PYR
IYR Pmt =
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV __#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

©2022 GOBC Training Ltd O 71

 MATH CLASS 5- PIMPO Questions
Amort = Term, with an AGO
11. Mike bought a house two years ago at which time he arranged a $110,000 mortgage. This loan was written at a nominal
rate of 9.5% per annum, compounded semi-annually, with a 10-year term and amortization period, and monthly payments of
$1,413. Today Mike has received an offer from Andre to buy his house for $50,000 cash plus assumption of his mortgage. If
current mortgage rates for similar mortgages are 12% per annum, compounded semi-annually, what is the market value of
Andre's offer, rounded to the nearest dollar?
(1) $127,146 (2) $137,795 (3) $90,312 (4) $89,792

N J =
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV __#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

12. As a marketing incentive to speed up the sale of newly completed but unsold condominiums, a developer agrees to provide
the purchasers with first mortgages written at 8% rather than the going market rate of 13%, If they pay the $45,000 asking
price. Under these circumstances, the developer would likely be equally satisfied (in cash equivalent terms) with an "all cash"
offer:

(1) less than $45,000. (2) more than $45,000. (3) of $45,000. (4) that includes an additional bonus in order to purchase
the unit.
N J =
__#NOM
IYR Pmt = __#PYR
__#EFF
__#PYR
PV __#NOM A=
T=
PMT P Ago =

FV I ________T_______
#N, press FV __#NOM
#PYR __#PYR
M __ #EFF
__#PYR
P __ #NOM

©2022 GOBC Training Ltd O 72