Question
Five years ago, you borrowed $280,000 to purchase a new duplex in north scottsdale. at the time you were able to finance it with a
Five years ago, you borrowed $280,000 to purchase a new duplex in north scottsdale. at the time you were able to finance it with a 5/1 ARM (fully amortizing over 30 years) that will reset to a higher interest rate in year 6. when you made the purchase, you put 25% down and financed the remainder. the initial interest rate was 4.8%. once the fixed portion was completed, the rate would adjust annually to LIBOR plus 3%.
1. what is the loan balance at the end of year 5?
2. if LIBOR rate at the end of the year 5 was 3.25%, what would be your payment beginning in year 6?
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