Numericals

A 3/1 ARM is made for $250,000 at 7 percent with a 30-year maturity. Fixed payments are to be made monthly for three years, after which the interest rate will reset.

6. Refer to the original question (1, 2), assuming the PAYMENT CAP of 15%, what would new payments be beginning in year 4 if the interest rate rose to 10%? Hint: unrestricted payment vs. capped payment. $1,912.74

Using (6), what will be the loan balance after four years?

a. $218,793.71

b. $194,483.30

c. $267,414.54

d. $243,104.13