Question
In: Finance
George secured an adjustable-rate mortgage (ARM) loan to help finance the purchase of his home 5...
George secured an adjustable-rate mortgage (ARM) loan to help
finance the purchase of his home 5 years ago. The amount of the
loan was $250,000 for a term of 30 years, with interest at the rate
of 9%/year compounded monthly. Currently, the interest rate for his
ARM is 5.5%/year compounded monthly, and George's monthly payments
are due to be reset. What will be the new monthly payment? (Round
your answer to the nearest cent.)
Solutions
jeff jeffy answered 2 years agoRelated Solutions
You are considering taking out an adjustable rate mortgage (ARM) to finance your new home and...
You are considering taking out an adjustable rate mortgage
(ARM) to finance your new home and have been given the following
information by the bank:
$250,000 house price
80% Loan to Value
200 bps margin
2.5% LIBOR – Index for Year 1
Teaser Rate in Year 1 – 2%
Periodic Cap – 1.5%
Life Cap – 5%
You also went on Bloomberg and found
the following LIBOR Index projections for the next few years:
3% - Index for Year 2...
You are looking to finance your home. The bank is offering a three-year ARM (adjustable-rate mortgage)...
You are looking to finance your home. The bank is offering a
three-year ARM (adjustable-rate mortgage) with an introductory rate
of 3.40%. It has an adjustment cap of 3.00% per adjustment period
with a lifetime adjustment of 8.00%. The rate is 4.00% over the
one-year LIBOR rate which is currently 1.25%.
What will your interest rate be after three years if the LIBOR
rate does not change? (Round your answer to 2 decimal
places.)
In three years, what is the...
You are looking to finance your home. The bank is offering a three-year ARM (adjustable-rate mortgage)...
You are looking to finance your home. The bank is offering a
three-year ARM (adjustable-rate mortgage) with an introductory rate
of 3.60%. It has a 3.00% adjustment cap per adjustment period, a
lifetime adjustment of 7.00%. The rate is 4.00% over the one-year
LIBOR rate, which is currently 1.35%.
a. What will your interest rate be after three years if the
LIBOR rate does not change? (Round your answer to 2 decimal
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Interest rate %
b. In three years,...
Five years ago, Diane secured a bank loan of $390,000 to help finance the purchase of...
Five years ago, Diane secured a bank loan of $390,000 to help
finance the purchase of a loft in the San Francisco Bay area. The
term of the mortgage was 30 years, and the interest rate was
8%/year compounded monthly on the unpaid balance. Because the
interest rate for a conventional 30-year home mortgage has now
dropped to 6.5%/year compounded monthly, Diane is thinking of
refinancing her property. (Round your answers to the nearest
cent.)
(a) What is Diane's current...
The Flemings secured a bank loan of $240,000 to help finance thepurchase of a house....
The Flemings secured a bank loan of $240,000 to help finance the
purchase of a house. The bank charges interest at a rate of 4%/year
on the unpaid balance, and interest computations are made at the
end of each month. The Flemings have agreed to repay the loan in
equal monthly installments over 25 years. What should be the size
of each repayment if the loan is to be amortized at the end of the
term? (Round your answer to...
An Adjustable Rate Mortgage (ARM) is made for $300,000 at an initial interest rate of 2...
An Adjustable Rate Mortgage (ARM) is made for $300,000 at an
initial interest rate of 2 percent for
30 years. The ARM will be adjusted annually. The borrower
believes that the interest rate at the
beginning of the year (BOY) 2 will increase to three percent
(3%).
a. Assuming that the ARM is fully amortizing, what will monthly
payments be during year 1?
b. Based on (a) what will the loan balance be at the end of year
(EOY) 1?...
At the time of origination, the expected yield on an adjustable rate mortgage (ARM) should be...
At the time of origination, the expected yield on an
adjustable rate mortgage (ARM) should be less than that of a Fixed
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Consdier an adjustable rate mortagage (ARM) loan for 650,000. The interest rate is indexed to the...
Consdier an adjustable rate mortagage (ARM) loan for 650,000.
The interest rate is indexed to the 10-year Treasury yield. The
loan has a margin 2.75%, first-year teaser rate of 2.75%, an annual
rate cap of 2% and a lifetime rate cap of 5%. The loan requires
monthly payments for 25 years. Assume that 10-year Treasury yields
are as shown blow.
10-yr treasury yield at first anniversary date (end of year 1)
3.5%
10-yr treasury yield at the end of second...
Sarah secured a bank loan of $155,000 for the purchase of a house. The mortgage is...
Sarah secured a bank loan of $155,000 for the purchase of a
house. The mortgage is to be amortized through monthly payments for
a term of 15 years, with an interest rate of 3%/year compounded
monthly on the unpaid balance. She plans to sell her house in 5
years. How much will Sarah still owe on her house? (Round your
answer to the nearest cent.)
Sarah secured a bank loan of $185,000 for the purchase of a house. The mortgage is...
Sarah secured a bank loan of $185,000 for the purchase of a
house. The mortgage is to be amortized through monthly payments for
a term of 15 years, with an interest rate of 3%/year compounded
monthly on the unpaid balance. She plans to sell her house in 10
years. How much will Sarah still owe on her house at that time?
(Round your answer to the nearest cent.)
$____
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