Real estate finance asjustable rate mortgage question

4 functions as appropriate. Lary is considering an ARM loan offered by a local lender. The loan amount is $400,000. 5 The term of the loan is 10 years. The index today is 2.1%. The margin on the loan is 3%. The teaser (first year only) 6 is 1%. The composite rate adjusts annually and is subject to annual and lifetime caps of 2% and 5%. The loan does not 7 provide for negative amortization nor does it provide floors. Assume the following forecast of index rates. The loan 8 requires 2 points at origination. The prevailing rate in the market for similar FRM loans is 6.25%. Make no changes to Payment 27 1. What is the payment in months 1 through 12? 28 Loan Balance 29 Loan Term (years) 30 Payments per Year 31 Index 32 Margin 33 Annual cap 34 Lifetime cap 35 Teaser 36 Annual Interest Rate 37 Origination Points 38 39 Balance 40 2. What is the balance at the EOY 1? 41 Payment 42 Annual Interest Rate 43 Loan Term (years) 44 Payments per Year