Question

Adjustable tate mortgage: 3% with terms 5/1 with a 2/6 cap for 30 years (assume the interest rate increases by 1.25% after the initial period and every 10 years thereafter.)

Answer 1

The cost of the mortgage is $119,500.

So the orginal monthly cost would be $503.82 for the first 5 years.

But after that, I don't understand how to do it. Do I caculate the rest of the monthly payments using the principal amount or do I take into account each new amount for each period? I also don't understand how to calculate it for every ten years...