Question

How much more interest willb mortgage for s1oo,000 at 9.25 mortgage at 8.5%? Express as S aid on a 30 vear fixed % compared with a xxx.xxx 17,873.5 I Question 5 options Question 6 (3 points) ) is a mo is a mortgage in which the An adjustable-rate mortgage (ARM he outstanding balance varies. The interest rate paid on outstand a period of time and then it y month interest rate is usually fixed fora iti reset periodically, sometimes ever You decide to purchase a home with a margin the life of the loan on the loan is 3.5%, and the overall rate ca p is 8% over Box 1: If the current index rate is 3.75%, what i interest rate of the ARM? Express as x.xx% Box 2: What is the maximum overall ARM rate of you loan? Express as xx.xx% Question 6 options

Answer 1

Index rate = 3.75%
Lender's margin = 3.5%
Overall rate cap = 8%

Calculated ARM interest rate = Index rate + Lender's margin
Calcualted ARM interest rate = 3.75% + 3.5% = 7.25%

Maximum overall ARM rate = Intial rate + overall rate cap
Maximum overall ARM rate = 7.25% + 8 % = 15.25%