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PART 1. Assume a $100,000 interest-only ARM with a 30-year maturity and an initial rate of 6 percent. If at the reset date (1st year)

PART 1. Assume a $100,000 interest-only ARM with a 30-year maturity and an initial rate of 6 percent. If at the reset date (1st year) the index has increased and the new interest rate becomes 8 percent, what is the new monthly payment?

PART 2. Following my calculation for years 1 and 2, what would be the payment adjustments and loan balances for years 3 to 5?

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