Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got...

 

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Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. In year 4, the index resets to 3.50%. What will his new mortgage payment be in year 4? (Write the answer as a number rounded to two decimals (e.g. if you get $50,66666, write 50.67). Tim wants to buy an apartment that costs $750,000 with an 85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaser rate of 3.75%. The reset margin on the loan is 300 basis points above 1 year CMT. In year 4, the index resets to 3.50%. What will his new mortgage payment be in year 4? (Write the answer as a number rounded to two decimals (e.g. if you get $50,66666, write 50.67).

Answer rating: 100% (QA)

SOLUTION To calculate Tims new mortgage payment in year 4 we need to first determine his initial loa... View the full answer