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 the following ​$193,300​, ​30-year mortgage. Assume that the initial interest rate is 6.50 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.

Answer 1

Basis the infromation available, the deails are provided below

Mortgage Amount = $193,300

Terms in years = 30

Initial Interest Rate = 6.5%

Adjustmet frequency = Annual

Adjustment = 1%

Applicble cap = 5% i.e. Total interest cap 11.5%

This is a calculation specific to Adjustable-Rate Mortgage

1) The current mortgage payment i.e. First Monthly payment = $1,221.79

2) Total Interest Paid = $458,073.15

3) Pyment after the first adjustment = $22,502.88

4) Maximum payment = $22,502.88

The payment shedule for the above term loan shall be as per below

Year				Ending
	Total	Principal	Interest	Principal
	Payments	Paid	Paid	Balance
				$193,300.00
1	$14,661.48	$2,160.60	$12,500.88	$191,139.40
2	$16,186.92	$1,916.45	$14,270.47	$189,222.95
3	$17,739.60	$1,721.70	$16,017.90	$187,501.25
4	$19,313.28	$1,567.76	$17,745.52	$185,933.49
5	$20,902.56	$1,447.91	$19,454.65	$184,485.58
6	$22,502.88	$1,357.10	$21,145.78	$183,128.48
7	$22,502.88	$1,521.64	$20,981.24	$181,606.84
8	$22,502.88	$1,706.17	$20,796.71	$179,900.67
9	$22,502.88	$1,913.05	$20,589.83	$177,987.62
10	$22,502.88	$2,145.05	$20,357.83	$175,842.57
11	$22,502.88	$2,405.13	$20,097.75	$173,437.44
12	$22,502.88	$2,696.78	$19,806.10	$170,740.66
13	$22,502.88	$3,023.81	$19,479.07	$167,716.85
14	$22,502.88	$3,390.43	$19,112.45	$164,326.42
15	$22,502.88	$3,801.58	$18,701.30	$160,524.84
16	$22,502.88	$4,262.57	$18,240.31	$156,262.27
17	$22,502.88	$4,779.45	$17,723.43	$151,482.82
18	$22,502.88	$5,358.98	$17,143.90	$146,123.84
19	$22,502.88	$6,008.81	$16,494.07	$140,115.03
20	$22,502.88	$6,737.44	$15,765.44	$133,377.59
21	$22,502.88	$7,554.43	$14,948.45	$125,823.16
22	$22,502.88	$8,470.45	$14,032.43	$117,352.71
23	$22,502.88	$9,497.58	$13,005.30	$107,855.13
24	$22,502.88	$10,649.26	$11,853.62	$97,205.87
25	$22,502.88	$11,940.58	$10,562.30	$85,265.29
26	$22,502.88	$13,388.46	$9,114.42	$71,876.83
27	$22,502.88	$15,011.96	$7,490.92	$56,864.87
28	$22,502.88	$16,832.28	$5,670.60	$40,032.59
29	$22,502.88	$18,873.36	$3,629.52	$21,159.23
30	$22,500.19	$21,159.23	$1,340.96	$0.00