Question
1. A $75,000 ARM is offered at 7.75% with monthly payments for 30 years. Future interest rates are expected to be: EOY1, 9.5%; EOY2, 10.25%.
1. A $75,000 ARM is offered at 7.75% with monthly payments for 30 years. Future interest rates are expected to be: EOY1, 9.5%; EOY2, 10.25%. One discount point was paid at origination.
a. Calculate the forecast payment for the first 3 years. [$537.31, $628.98, $669.07]
b. Calculate the effective interest rate for a 3 year holding period. [9.47%]
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Fearless Finances A Timeless Guide To Building Wealth
Authors: Cassandra Cummings
1st Edition
1400230381, 978-1400230389
