Dennis signs a 3/1 ARM to finance a 30-year loan for $400,000 at an initial rate of 9%. The rate is reset annually after the first 3 years and is based on the Libor rate 30-days prior to the anniversary plus a margin of 2%. The rate resets have an annual cap of 1.5% and an annual floor of 1.2%. They also have a lifetime cap of 5% and a lifetime floor of 3%. The loan terms dictate that the mortgage payments cannot be changed for any reasons other than rate resets for the entire duration of the loan. For example, if the borrower pays extra money towards the principal, that action will not change the monthly payment schedule. However, that can speed up the loan termination.

C) What is the outstanding loan balance at the end of the 7th year?