Question
Assume you have decided to buy a new house in Malibu that costs $922,000 (a bargain for that community). You want to get a conforming
Assume you have decided to buy a new house in Malibu that costs $922,000 (a bargain for that community). You want to get a conforming mortgage. Assuming no points, how much cash do you need to bring to the closing. Also, assume there are no other fees. a) Assuming no points, how much cash do you need to bring to the closing. Also, assume there are no other fees. b) How much is the mortgage for?
Now, let's think about Mortgage B, a 30-year adjustable-rate mortgage with no points. Like the prior mortgage, it is a conforming mortgage. The interest rate offered is 5% and it resets after year 2 at 100 basis points over the 3-year Treasury. The annual rate increase is capped at 150 bps. c) What is the monthly payment? d) How much do you owe on this mortgage on the two-year anniversary? e) On the second anniversary, the 3-year Treasury is trading at 5%. What is your new mortgage interest rate in %?
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