You are considering an ARM with the following characteristics: Mortgage amount = $200,000 Margin = 2.50...

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You are considering an ARM with the following characteristics: Mortgage amount = $200,000 Margin = 2.50 Term = 30 years Monthly Payments Initial Teaser Rate = 3.50% All subsequent adjustments are made from the Teaser Rate 2/6 Interest rate caps Index = 1 year TB yield One-year adjustable Discount points = 2.00 Prepayment penalty = 4% for the first three years A. (1 pt) If the TB yield is 3.75% at the outset, what is the monthly payment for year one? Answer B. (1 pt) If the TB yield goes from 3.75% to 4.75% at the end of year one, what is the monthly payment for year two? Answer c. (1 pt) If the loan is repaid at the end of year two, what is the effective cost? Answer D. (1 pt) Suppose that, at the end of year two, the index is 5.00% and stays constant for the remaining life of the loan. What is the APR on the loan? Answer You are considering an ARM with the following characteristics: Mortgage amount = $200,000 Margin = 2.50 Term = 30 years Monthly Payments Initial Teaser Rate = 3.50% All subsequent adjustments are made from the Teaser Rate 2/6 Interest rate caps Index = 1 year TB yield One-year adjustable Discount points = 2.00 Prepayment penalty = 4% for the first three years A. (1 pt) If the TB yield is 3.75% at the outset, what is the monthly payment for year one? Answer B. (1 pt) If the TB yield goes from 3.75% to 4.75% at the end of year one, what is the monthly payment for year two? Answer c. (1 pt) If the loan is repaid at the end of year two, what is the effective cost? Answer D. (1 pt) Suppose that, at the end of year two, the index is 5.00% and stays constant for the remaining life of the loan. What is the APR on the loan? Answer

Answer rating: 100% (QA)

A 1 pt If the TB yield is 375 at the outset what is the monthly payment for year one Answer 84375 WO... View the full answer