Question: A 3/1 ARM is made for 395,000 at an initial rate of 7.25% with constant monthly payments. The loan is fully amortizing, has monthly payments,

A 3/1 ARM is made for 395,000 at an initial rate of 7.25% with constant monthly payments. The loan is fully amortizing, has monthly payments, and has a term of 30 years. Assume that by the end of year 3 (or the beginning of year 4) market interest rates increase in the interest rate by which the borrower is being charged interest to rise from 7.25% to 7.56%. Assume that there are no payments caps. What monthly payment would the borrower have during Year 4? Round your answer to two decimals.

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