Consider a FA 30yr LPM 5/1 ARM with no interest rate caps and no payment caps. The
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Consider a FA 30yr LPM 5/1 ARM with no interest rate caps and no payment caps. The loan is for $500,000, with one point and other Regulation-Z fees of $10,000. The fixed period rate is 6% and the margin 2%. The underlying index at dates 0,1,2,3,4,5,6 years is 1%, 5%, 3%, 2%, 8%, 9%, 9%, respectively, and then stays at 9% until mortgage maturity. What is the APR?
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Answer rating: 100% (QA)
The APR is calculated as follows First we calculate the ... View the full answer
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