You wish to purchase a property worth $50000 with a $10000 down payment. You take out a 2/28 hybrid ARM with one-month LIBOR as the reference rate. There is a two-year annual teaser rate of 2% and beginning in the third year the rate resets each year. The margin is 3.5% annually. Assume the loan is fully amortizing and:

• Find the monthly payments during the first two years.

• Find the monthly payments during the third year assuming 1-month LIBOR is 0.5% annually at the beginning of year three.

Answer rating: 100% (QA)

a Property cost 50000 Down payment 10000 Mortgage amountPV Cost of property Down payment 500001... View the full answer