A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a "teaser" rate of 4 percent, after that the rate can reset with a 5 percent annual payment cap. On the reset date, the composite rate is 6 percent. Assume that the loan allows for negative amortization. What would be the outstanding balance on the loan at the end of Year 3?

Multiple Choice

• $192,926

• $190,074

• $192,812

• $192,337