A borrower takes out a 30-year adjustable rate mortgage loan for $300,000 with monthly payments and 3 points. 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 be the effective cost of the loan if it is repaid at the end of year 3?

	4.00%
	6.00%
	5.42%
	5.00%