Assume the following for a one-year adjustable rate mortgage loan that is tied to the one-year Treasury rate:
Loan amount: | $150,000 |
Annual rate cap: | 2% |
Life-of-loan cap: | 5% |
Margin: | 2.75% |
First-year contract rate: | 5.50% |
One-year Treasury rate at end of year 1: | 5.25% |
One-year Treasury rate at end of year 2: | 5.50% |
Loan term in years: | 30 |
Given these assumptions, calculate the following:
a. Initial monthly payment.
b. Loan balance end of year 1.
c. Year 2 contract rate.
d. Year 2 monthly payment.
e. Loan balance end of year 2.
f. Year 3 contract rate.
g. Year 3 payment
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