Question

Use your calculator to determine​ (1) the current mortgage payment​ (2) the total interest​ paid, (3) the payment after the first adjustment and​ (4) the maximum payment for each of the following 138,200, ​30-year mortgages. Assume that the initial interest rate is 6.90 percent.

a. Annually​ adjustable, 1 percent per​ year, 5 percent lifetime cap. Assume also that rates increase at least 1 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

b. Fixed for 3 years and then annually​ adjustable, 2 percent per​ year, 5 percent lifetime cap. Assume also that rates increase at least 2 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

c. Fixed for 5 years then annually​ adjustable, 2 percent per​ year, 6 percent lifetime cap. Assume also that rates increase at least 2 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

d. Fixed for 5 years and then adjustable every 5​ years, 3 percent per​ period, 6 percent lifetime cap. Assume also that rates increase at least 3 percent per year until they reach the lifetime cap and rates never again drop below the lifetime cap for the term of the mortgage.

a. The current mortgage payment is $ (Round to the nearest​ cent.)

The payment after the first adjustment is $ (Round to the nearest​ cent.)

The maximum payment is $ (Round to the nearest​ cent.)

The total interest paid for a 138,200, ​30-year mortgages $ (Round to the nearest​ cent.)

b.  The current mortgage payment is $ (Round to the nearest​ cent.)

The payment after the first adjustment is $ (Round to the nearest​ cent.)

The maximum payment is $1. (Round to the nearest​ cent.)

The total interest paid for a 138,200, ​30-year mortgages ​$. (Round to the nearest​ cent.)

c. The current mortgage payment is   $. (Round to the nearest​ cent.)

The payment after the first adjustment is $ (Round to the nearest​ cent.)

The maximum payment is $ (Round to the nearest​ cent.)

The total interest paid for a 138,200, ​30-year mortgages $ (Round to the nearest​ cent.)

d. The current mortgage payment is $ (Round to the nearest​ cent.)

The payment after the first adjustment is $ (Round to the nearest​ cent.)

The maximum payment is $ (Round to the nearest​ cent.)

The total interest paid for a 138,200, ​30-year mortgages ​$ (Round to the nearest​ cent.)

Answer 1

Here, Mortgage Amount = $ 138,200

Tenure of Mortgage = 30 Years ( 360 Months)

Initial Interest Rate = 6.90%

Now,

Case - a :- Rate is Annually Adjusted by 1%, Life Time Cap = 5%.

Ans. 1. The Current Mortgage Payment = $ 910.19 per month

2. Total Interest Paid = $ 342,882.68

3. Payment after First Adjustment = $ 1,002.59 per month

4. The Maximum Payment = $ 1,384.07 per month

For Calculation Kindly find the attached Photos.

Case - b :- Rate is fixed for 3 Years and then Annually Adjusted by 2%, Life Time Cap = 5%.

Ans. 1. The Current Mortgage Payment = $ 910.19 per month

2. Total Interest Paid = $ 335,227.85

3. Payment after First Adjustment = $ 1,090.31 per month

4. The Maximum Payment = $ 1,374.13 per month

For Calculation Kindly find the attached Photos.

Case - c :- Rate is fixed for 5 Years and then Annually Adjusted by 2%, Life Time Cap = 6%.

Ans. 1. The Current Mortgage Payment = $ 910.19 per month

2. Total Interest Paid = $ 343,048.42

3. Payment after First Adjustment = $ 1,081.65 per month

4. The Maximum Payment = $ 1,443.97 per month

For Calculation Kindly find the attached Photos.

Case - d :- Rate is fixed for 5 Years and then Adjusted every 5 Year by 3%, Life Time Cap = 6%.

Ans. 1. The Current Mortgage Payment = $ 910.19 per month

2. Total Interest Paid = $ 328,382.25

3. Payment after First Adjustment = $ 1,171.71per month

4. The Maximum Payment = $ 1,423.62 per month

For Calculation Kindly find the attached Photos.