An interest only ARM is made for $200,000 for 30 years. The start rate is 5 percent
Question:
An interest only ARM is made for $200,000 for 30 years. The start rate is 5 percent and the borrower will (1) make monthly interest only payments for 3 years. Payments thereafter must be sufficient to fully amortize the loan at maturity.
a. If the borrower makes interest only payments for 3 years, what will payments be?
b. Assume that at the end of year 3, the reset rate is 6 percent. The borrower must now make payments so as to fully amortize the loan. What will payments be?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 82% (17 reviews)
a Interest only payments for the 1 year 83333 b The loan bala...View the full answer
Answered By
Akshay Singla
as a qualified engineering expert i am able to offer you my extensive knowledge with real solutions in regards to planning and practices in this field. i am able to assist you from the beginning of your projects, quizzes, exams, reports, etc. i provide detailed and accurate solutions.
i have solved many difficult problems and their results are extremely good and satisfactory.
i am an expert who can provide assistance in task of all topics from basic level to advance research level. i am working as a part time lecturer at university level in renowned institute. i usually design the coursework in my specified topics. i have an experience of more than 5 years in research.
i have been awarded with the state awards in doing research in the fields of science and technology.
recently i have built the prototype of a plane which is carefully made after analyzing all the laws and principles involved in flying and its function.
1. bachelor of technology in mechanical engineering from indian institute of technology (iit)
2. award of excellence in completing course in autocad, engineering drawing, report writing, etc
4.70+
48+ Reviews
56+ Question Solved
Related Book For
Real Estate Finance and Investments
ISBN: 978-0073377339
14th edition
Authors: William Brueggeman, Jeffrey Fisher
Question Posted:
Students also viewed these Business questions
-
A basic Arm is made for $200,000 at an initial interest rate of 6 percent for 30 years with an annual reset date. The borrower believes that the interest rate at the beginning of year (BOY) 2 will...
-
A basic ARM is made for $200,000 at an initial interest rate of 6 percent for 30 years with an annual reset date. The borrower believes that the interest rate at the beginning of year (BOY) 2 will...
-
A 3/1 ARM is made for $150,000 at 7 percent with a 30-year maturity. a. Assuming that fixed payments are to be made monthly for three years and that the loan is fully amortizing, what will be the...
-
IKEA was founded in 1943 by a 17-year-old Swede named Ingvar Kamprad. The company, which initially sold pens, Christmas cards, and seeds from a shed on Kamprad?s family farm, eventually grew into a...
-
Refer to the value chain in Exhibit 2.4. Consider a manufacturer of computers and give two examples of costs for each segment of the company's value chain. Which of these costs would be included in...
-
Find the probability of an IQ greater than 70 (the requirement for being a statistics textbook author). Assume that adults have IQ scores that are normally distributed with a mean of 100 and a...
-
Define project management principles in the context of software development.
-
Fantastique Bikes is a company that manufactures bikes in a monopolistically competitive market. The following graph shows Fantastique?s demand curve, marginal revenue curve (MR), marginal cost curve...
-
Discuss the implications of the efficient market hypothesis on the effectiveness of technical and fundamental analysis in stock valuation.
-
Roger Smith established an insurance agency on July 1, 20Y5, and completed the following transactions during July: a. Opened a business bank account in the name of Smith Insurance Inc., with a...
-
List each of the main terms likely to be negotiated in an ARM. What does pricing an ARM using these terms mean?
-
What is the difference between interest rate risk and default risk? How do combinations of terms in ARMs affect the allocation of risk between borrowers and lenders?
-
Consider the following observed values of (x i , y i ): (1, 3), (3, 7). a. Find the estimated regression line based on the observed data. b. For each x i , compute the fitted value of y i using c....
-
The English enrollments at five high schools in the Santa Rosa Unified School District are as follows: In Problems 42-47, suppose that 45 copies of an important instructional video are to be...
-
Use this information to answer the questions in Problems 46-49. The fraternity \(\Sigma \Delta \Gamma\) is electing a national president, and there are four candidates: Alberto (A), Bate (B), Carl...
-
Article 7 of the French constitution states, "The President of the Republic is elected by an absolute majority of votes cast. If this is not obtained on the first ballot, a second round of voting...
-
Determine the winner, if any, using the voting methods in Problems \(45-50\). Seventeen people serve on a board and are considering three alternatives: A, B, and C. Here are the choices followed by...
-
The township of Bella Rosa is divided into two districts, uptown (pop. 16,980) and downtown (pop. 3,350) and is governed by 100 council members. Use this information in Problems 48-53. What are the...
-
1. Why is the problem of bringing light to people who dont have access to reliable electricity not being tackled in a meaningful way by a large lighting company, such as GE (General Electric) or...
-
This problem continues the Draper Consulting, Inc., situation from Problem 12-45 of Chapter 12. In October, Draper has the following transactions related to its common shares: Oct 1 Draper...
-
You are a new loan officer with Alpha Mortgage, and the manager of the loan department has just presented a problem to you. He is unable to complete the APR calculation on an adjustable rate mortgage...
-
You are a new loan officer with Alpha Mortgage, and the manager of the loan department has just presented a problem to you. He is unable to complete the APR calculation on an adjustable rate mortgage...
-
When would the cost of credit life insurance be included in the finance charge of an APR calculations for the truth-in-lending disclosures?
-
What strategies might you use to implement the personal change needed to support organizational change? What is the relevance of unity consciousness in organizational leadership, communications, and...
-
Recognizing the literature (and its limitations) for conveying policing organization, management, and change - what management/organizational changes are needed in policing today? Why? How do we set...
-
How do organizations effectively navigate the complexities of organizational change, integrating advanced change management methodologies to mitigate resistance and foster sustainable transformation?
Study smarter with the SolutionInn App