Question
Assume that a lender offers a 30-year, $150,000 adjustable rate mortgage (ARM) with the following term: Initial interest rate = 7.5% Index = 1-year treasuries
Assume that a lender offers a 30-year, $150,000 adjustable rate mortgage (ARM) with the following term:
- Initial interest rate = 7.5%
- Index = 1-year treasuries
- Payment reset every year
- Margin = 2%
- Interest rate cap = 1% annually; 3% lifetime
- Fully amortizing
Index rates are forecasted to be the following:
| Year 2 | Year 3 |
| 7% | 8.5% |
Complete the following amortization schedule.
|
| Monthly Payment | Interest | Principal Amortization | Outstanding Balance |
| Month 12 | - | - | - | $148,617.25 |
| Month 13 |
|
|
|
|
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Financial Literacy For Managers
Authors: Richard A. Lambert
1st Edition
1613630182, 978-1613630181
