Question: A borrower takes out a 3 0 - year adjustable rate mortgage loan for $ 2 0 0 , 0 0 0 with monthly payments.

A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments. The first two years of the loan have a "teaser" rate of 4%, after that, the rate can reset with a 2% annual rate cap. On the reset date, the composite rate is 5%. What would the Year 3 monthly payment be?

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