Question
You are buying a home with a $375,000 mortgage. You're deciding between conventional 30 yr loan at 4.5% and an ARM with the initial rate
You are buying a home with a $375,000 mortgage. You're deciding between conventional 30 yr loan at 4.5% and an ARM with the initial rate of 4%, an annual interest cap at 1% point, and a lifetime interest rate cap at 5% points.
1-Calculate the monthly mortgage payment with the conventional loan
2-Calculate the initial monthly ARM mortgage payment
3-At the end of the first year, interest rates have increased to cause the annual cap to be triggered. Calculate the second year payment for the ARM if the balance owed at the end of the first year is $368,396.11
Please use formulas not excel.
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