Please help!!

Bart and April are purchasing a house with a 15-year, 2/1 ARM for $315,000 at 5.85% with a 2/8 cap structure. What will the difference in payments be from year 2 to year 3?

Question

Please help!!

Bart and April are purchasing a house with a 15-year, 2/1 ARM for $315,000 at 5.85% with a 2/8 cap structure. What will the difference in payments be from year 2 to year 3?

amistre64 · Answer

i worked at developing a formula that would incorporate Payment in terms of Balances
$$B_c=B_ok^{ct}-B_ok^{nt}(\frac{1-k^{ct}}{1-k^{nt}})$$
$$B_c=B_ok^{ct}(1-k^{(n-c)t}~(\frac{1-k^{ct}}{1-k^{nt}}))$$
and i believe i came up with this monstrocity to test out :)

amistre64 · Answer

my ti83 will be put to good use now

amistre64 · Answer

to many buttons to press :)  lets try the wolf

amistre64 · Answer

the wolf gives me a balance after 2 years of:  287140.2061

which we run thru a payment calculation

amistre64 · Answer

287140.2061(1+.0785/12)^(13*12)(1-(1+.0785/12))/(1-(1+.0785/12)^(13*12))

the wolf say 2942 with that one .... is that an option by chance?

amistre64 · Answer

difference in payments ....

amistre64 · Answer

the begining payments i get as 2632

  2942
-2632
------
    310  about

anonymous · Answer

thanks so much!

amistre64 · Answer

youre welcome, and excel helped out alot ;)