You are buying a $1,250,000 property, financing it with an 75% loan-to-value ratio, adjustable rate mortgage with a teaser rate of 2.95%. At the end of the first year, the mortgage loan rate adjusts to 3.875%. The loan has a 5 percent payment cap. You expect the property to appreciate 5% each year. 30 year loan/360 months

1. What is the teaser payment?

2. What is the outstanding balance on the 1-year reset date?

3. How much principal and interest was paid in the first year?

4. Given the reset interest rate, what is the uncapped payment?

Answer rating: 100% (QA)

1 Teaser payment is the first minimal amount of payment which is made against the loan The loan is 7... View the full answer