ZuoTi.Pro
Question

You have taken out a $100,000, one-year ARM. The teaser rate in the first year is...

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 calculator. thank you!

business   finance   
0 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

0 0
Add a comment
Know the answer?
Add Answer to:
You have taken out a $100,000, one-year ARM. The teaser rate in the first year is...
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for? Ask your own homework help question. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • Jennifer has just borrowed $100,000 to buy a home on a 30-year, adjustable rate mortgage(ARM). The...

    Jennifer has just borrowed $100,000 to buy a home on a 30-year, adjustable rate mortgage(ARM). The benchmark index is LIBOR which is currently at 2.5%. Her margin is 2% and the loan has caps of 1% annually, and 5% lifetime. While her initial rate should be 4.5%, the lender has granted her a "teaser" rate of 4% for the first year. Assuming that the periodic cap applies to any initial rate, including the teaser rate, if LIBOR rises 1 1/2%...

  • Suppose that you are thinking about taking out an adjustable rate loan (ARM) with the following...

    Suppose that you are thinking about taking out an adjustable rate loan (ARM) with the following information:                Teaser Rate: 3.5%        Margin: 4.0%        Year 1 TSY Strip Index: 2.0% Year 2 TSY Strip Index: 3.5% Year 3 TSY Strip Index: 1.5% Periodic Cap: 1.0% Lifetime Cap: 5.0% Caps are NOT based off of the Teaser A)What is the interest rate in the 1st year of the loan? 3.5% 5.5% 6.0% 7.5% None of the above B)What is the interest rate...

  • A mortgage broker is offering a 25-year $270,000 mortgage with a teaser rate. In the first...

    A mortgage broker is offering a 25-year $270,000 mortgage with a teaser rate. In the first two years of the mortgage, the borrower makes monthly payments on only a 3.6 percent APR interest rate. After the second year, the mortgage interest rate charged increases to 6.6 percent APR. What are the monthly payments in the first two years? What are the monthly payments after the second year?

  • A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The...

    A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a “teaser” rate of 4%, after that, the rate can reset with a 2% annual rate cap. On the reset date, the composite rate is 5%. What would the Year 3 monthly payment be? a. $955 b. $1,071 c. $1,067 d. $1,186 e. Because of the rate cap, the payment would not change.

  • 2. (25 Points) Suppose a borrower takes out a 30-year adjustable rate mortgage loan for $200,000...

    2. (25 Points) Suppose a borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a "teaser" rate of 4%, after that, the rate can reset with a 2% annual rate cap. On the reset date, the composite rate is 7%. What would the Year 3 monthly payment be? (15 points) Step I Step2 PV= -179084.11 PV = -200 000 I= 7412=10.58) I=47212= 10.33) N= 336 N=360 130x2)...

  • You have just taken out a mortgage for $575,000, at a fixed rate of 4.75% per...

    You have just taken out a mortgage for $575,000, at a fixed rate of 4.75% per year, compounded monthly, and a term of 30 years. a) Calculate the monthly payments b) For the first six months' payments, calculate the portion that is interest and the portion that is principal c) Immediately after the sixth payment, what is the balance remaining on the mortgage? d) If you design the mortgage so that the payments will grow at 0.20% per month, what...

  • Consider a ARM that will adjust annually, based on the one-year constant maturity U. S. Treasury...

    Consider a ARM that will adjust annually, based on the one-year constant maturity U. S. Treasury Bill rate. Further, assume that this mortgage has a starting interest rate of two percent (2%) for the first year. Additionally, the margin on this mortgage is 250 basis points. Finally, this loan has a 1.50% annual interest rate cap, and a 5.00% lifetime interest cap. At the time that the mortgage is offered, the one-year constant maturity T-Bill rate is 1.50%. a. If...

  • You want to buy a house and take out a mortgage for $250,000. The only mortgage...

    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...

  • You take a 5/1 interest-only ARM for $250,000, monthly payments, 30-year term. The initial contract rate...

    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?

  • you have just taken out a 30 year $120,000 mortgage on your new home. This mortgage...

    you have just taken out a 30 year $120,000 mortgage on your new home. This mortgage is to be repaid in 360 equal monthly installments. if the stated (nominal) annual interest rate is 15.73 percent, what is the amount of interest portion of the FIRST installment?

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT