Home Mortgages SS12017 (1).pdf Adobe Acrobat Reader DC File Edit View Window Hel Home Tools Home Mortgages S... Sign In 2 3 t Share Export PDF On March 3, 2016 the average adjustable interest rate (ARM) was 2.84%. The adjustable rate is linked to an economic index. The interest rates, and your payments, are periodically adjusted up or down as the economic index fluctuates. This rate is often fixed for a period of time. Most home buyers decide to refinance at the fixed rate because it can go up by as much as 6% Create PDF A Adobe PDF Pack Convert files to PDF and easily combine them with other file types with a paid subscription 7, The first 5 years of an ARM has an interest rate of 2.84%. Calculate what the monthly payment would be for the first 5 years on a loan amount of S150,000. When you calculate your monthly payment, you will assume that the loan is amortized, or calculated, for 30 years. Make sure you plug in a t value representing 30 years. Select File to Convert to PDF After the first 5 years, the interest rate will begin to fluctuate with the market, so it is a good time to refinance your loan at a fixed interest rate. Your monthly payments with the ARM went to paying the interest and the principle on the loan and you have a new loan balance of 132,967.24. It will cost you $3000 to refinance. You can refinance your new balance+ $3000 refinance fee at 4.5% fixed interest rate Select File 8. Calculate the next 25 years monthly payment on the remaining balance of the house + refinance fee, at a 4.5% interest rate. Make sure you plug in a t value representing 25 years Edit PDF 9. Compute the total amount paid over the 30 year loan. 10. Was it more beneficial to do an ARM with this cost added? Explain your answer Convert and edit PD s with Acrobat Pro DC Start Free Trial 9:43 PM 4/15/2019