You have decided to buy a 3,250 square-feet house in Denton, close to a good public school. The average price in the area is $190 per square feet. The bank will finance 80% of the house value, so you need savings for the 20% down payment. You sign a 20-year 3/1 adjustable rate mortgage (ARM), which carries a 3.2\% fixed rate for the first 3 years, and then (after 3 years) is adjusted to the 1 year LIBOR +1.25% Compute your monthly payments in 3 years (month 37 ) if the LIBOR is 5% Multiple Choice $3,580 $3,287 $3,964 $3,495