Refer to problem 2. As a second ARM alternative, assume the borrower can borrow S150,000 for 30
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Refer to problem 2. As a second ARM alternative, assume the borrower can borrow S150,000 for 30 years with the following terms: Initial interest rate - 7 percent Index 1-year Treasuries Payments adjusted each year Margin = 2 percent Interest rate cap None Payment cap 5 percent increase in any year Negative amortization = Yes Discount points 2 percent Based on estimated forward rates, the index to which the ARM is tied is forecasted as follows: Beginning of year BOY 27 percent: BOY 38.5 percent; BOY 4 9.5 percent: BOY 5 11percent Compute the payments, loan balances, and yield for the unrestricted ARM for the five-year period.
AppendixLO1
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Related Book For
Real Estate Finance And Investments
ISBN: 9780073524719
13th Edition
Authors: William Brueggeman, Jeffrey Fisher
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