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3) Assume a 2/1 ARM without cap. Term=30 years. Initial loan balance=$200,000. The teaser rate=7%, margin=2%. What is the mortgage rate for Year 2? Year
3) Assume a 2/1 ARM without cap. Term=30 years. Initial loan balance=$200,000. The teaser rate=7%, margin=2%. What is the mortgage rate for Year 2?
Year | LIBOR | Mortgage rate | Beginning balance | mortgage payment | Interest payment | Principal payment | Ending balance |
1 | 8.60% |
|
|
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|
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2 | 9.50% |
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|
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|
| |
3 | 10% |
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|
|
Select one:
a. 7%
b. 12%
c. 11.5%
d. 9.5%
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