Question: You have a choice between a 30-year fixed rate loan at 7.5% and an ARM with a first-year rate of 20) 5%. The ARM rate

You have a choice between a 30-year fixed rate loan at 7.5% and an ARM with a first-year rate of 20) 5%. The ARM rate rises to 8.5% at the start of the third year. Neglecting compounding and changes

in principal, estimate your monthly savings with the ARM during the first year on a $180,000 loan.

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