You take a 5/1 interest-only ARM for $250,000, monthly payments, 30-year term. The initial contract rate is 4.5% for the first 5 years. What is your monthly payment for the first 5 years?
Mortgage Amount (P)= 250000
Year of Amortization = 30
Number of months (n)= 30*12= 360
Rate applicable for first 5 years will be Initial contract rate
=4.5%
Monthly rate (i)= 4.5%/12=0.00375
Monthly payment formula = P*i/(1-((1+i)^-n))
250000*0.00375/(1-((1+0.00375)^-360))
=1266.713275
So Payment for first 5 years will be $1266.71
Note: Excel or Financial calculator function =
=Pmt(rate per period, Number of periods, -Present Value)
Pmt(0.00375, 360, -250000)
=$1,266.71
(Please thumbsup)
You take a 5/1 interest-only ARM for $250,000, monthly payments, 30-year term. The initial contract rate...
You want to buy a house and take out a mortgage for $250,000. The only mortgage that you can afford is a 30 year ARM that has a fixed rate of 3% annual compounded monthly for the first 3 years and then can adjust every year after that. Against the advice of a wise EMIS professor that you once had, you decided to take the mortgage. a) What is the monthly payment for his home mortgage for the first 3...
A borrower takes out a 5/1 Hybrid ARM for $200,000 with an initial contract interest rate of 3.35%. The interest rate will adjust according to the 1 yr LIBOR rate, plus a margin of 2%. At the first reset date, 1 yr LIBOR is at 1%. What will the borrowers monthly payment be immediately after the first reset? (State the payment as a positive number. Unless otherwise stated, you can assume 5/1 ARMs have a term of 30 years. Round...
Ann gets a 30 year 1/1 Fully Amortizing ARM for $1,000,000, with monthly payments and monthly compounding. The initial rate is 3%. In the future, the rate will reset to 250 basis points above the LIBOR. There are no rate caps or floors. Suppose at the first reset, the LIBOR was 6%. What is the monthly mortgage payment for the second year?"
You have taken out a $100,000, one-year ARM. The teaser rate in the first year is 4.5% (annual). The index interest rate after the first year is 3.25% and the margin is 2.75%. (Note: the term on this ARM is 30 years). There is also a periodic (annual) rate cap of 1.00%. Given this information, determine the monthly mortgage payment you would be scheduled to make in month 1 of the mortgage loan’s term. please show solving using a financial...
2. An ARM is made for $50,000 for 30 years with the following terms Initial interest rate 1 percent Paymen Interest rate cap -none Discount points point Negative amortization is not allowed Index 1-year Treasuries Margin 200 basis points ts reset each year Payment cap-none Based on estimated forward rates, the 1-year Treasury yields to which the ARM is tied is forecasted as follows: Beginning of year (BOY) 2-one percent (1%); (BOY) 3-two percent (2%); (BOY) 4-35%; (BOY) 5-5% Compute...
Consider a 30-year adjustable rate mortgage (ARM), which requires the borrower to make monthly payments at the end of each month. The mortgage amount is $432,000 and the APR on the mortgage is 3.65% for the first 10 years and then 3.87% for the next 20 years. Prepare a loan amortization schedule for this mortgage. Assume that the mortgage closing date is October 1, 2018. Among other things, the following columns should be included. (50) (i) Date (ii) Beginning Balance...
The mortgage on your house is five years old. It required monthly payments of $1,450, had an original term of 30 years, and had an interest rate of 8% (APR). In the intervening five years, interest rates have fallen and so you have decided to refinance—that is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a 30-year term, requires monthly payments, and has an interest rate of 6.125% (APR). a. What monthly repayments will be required with...
11. Suppose that you take out a $250,000 house mortgage from your local savings bank. The bank requires you to repay the mortgage in equal annual installments over the next 30 years. Suppose that the interest rate is 5% a year. Then what is the amount of mortgage payment each year? (a) $16,263 (b) $13,452 (c) $12,583 (d) $10,127 12. Consider a borrower that is approved for a standard 15-year, fully amortizing house mortgage with an original balance of $500,000...
A basic ARM is made for $500, 000 at an initial interest rate of 3% with 2 discount points for 10 years. Payments are to be reset each year. The borrower believes that the interest rate at the beginning of year 2 will increase to 9 percent. Assuming that fulling amortizing is made and negative amortization is allowed if payment cap reached. If the ARM loan has a maximum 5% annual increase payment cap, what is the expected yield to...
suppose you take out a 30- year mortgage of $100,000 with a fixed interest rate of 5%. You must take 360 equal monthly payment write an equation that defines what the payment is?