ven the following Adjustable Rate Mortgage (ARM); Loan amount $100,000 20 years, monthly payment Discount point: 0 Origination fee: $8.000 Teaser rate: 7.5% Margin: 225 basis points Rate caps: 2.5% annually. 6% lifetime Market Index: EOY 1 2 3 Index 8.6% 9.5% 10.59 4 5 11.5% 10.5% What is the effective cost of this loan if you pay it off at the end of year 22 13.32% 10.33% 8.68% 12/05% A house is for sale for $250,000. You have a choice of two 20-year mortgage loans with monthly payments: (1) if you make a down payment of $25,000, you can obtain a loan with a 6% rate of interest or (2) if you make a down payment of $50,000, YOU can obtain a loan with a 5% rate of interest. What is the effective annual rate of interest on the additional $25,000 borrowed on the first loan? 12.95% 100% 6.00% 18.67%