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4. a)Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial

4. a)Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. What is Tims monthly mortgage payment going to be during the 1st 3 years? (Write the answer as a number rounded to two decimals (e.g. if you get $50,66666, write 50.67).

b) Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. In year 4, the index resets to 3.50%. What will his new mortgage payment be in year 4? (Write the answer as a number rounded to two decimals (e.g. if you get $50,66666, write 50.67).

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