The Smith family has borrowed $320,000 using a 5/1 ARM with an initial fully-indexed rate of 4.25% and paid no points at origination. The fully-indexed rate is determined by the yield on the LIBOR index plus a margin of 250 basis points. What was the yield on the LIBOR index at the time when the Smith family purchased their house?

QUESTION 8 What is the balance remaining of their loan at the first reset date?

If, at the first reset date, the yield on the LIBOR index is 2.25%, what is the scheduled monthly payment for the sixth year of the loan?