Question
Five years ago, a borrower took out 5/1 ARM in the amount of $300,000. With the start rate on the loan at 4%, the principal
Five years ago, a borrower took out 5/1 ARM in the amount of $300,000. With the start rate on the loan at 4%, the principal and interest payment has been $1,432.25. Its time for the first interest rate adjustment. Based on the current index rate and the terms of the promissory note, you determine that the borrower's new rate will be 6%. The current principal balance on the loan is $271,342. First, calculate the amount of the new payment that will fully amortize the current balance over the remaining 25 years (300 payments) of the term at the new rate of 6%. Next, determine how much the payment will increase compared with the original payment and report that value below. To be clear, I want the amount of the payment increase, not the amount of the payment. (Input your answer rounded to the nearest whole dollar and without the $ sign, e.g., 100)
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