In a 2/28 hybrid adjustable-rate mortgage (ARM), the initial interest rate is fixed for 2 years, then is adjusted every 6 months. (You usually pay points up front at closing in exchange for the rate lock for the first 2 years.) Suppose that you buy a house with a $200,000 mortgage with a 2/28 ARM with initial rate of 3%

In a 2/28 "hybrid" adjustable-rate mortgage (ARM), the initial interest rate is fixed for 2 years, then is adjusted every 6 months. (You usually pay "points" up front at closing in exchange for the "rate lock" for the first 2 years.) Suppose that you buy a house with a $200,000 mortgage with a 2/28 ARM with initial rate of 3%; and suppose that 2 years later, the interest rate goes up to 5%. (a) What was your payment originally, at 3% ? (Round your answer to two decimal places.) The original monthly payment at 3% interest rate is $ (b) What is your new payment? (Hint: The amount of the loan is no longer $200,000, and you have only 28 years to pay it off.) (Round your answer to two decimal places.) The new monthly payment is $