Jacey obtains a 30-year 6/2 ARM at 4% with a 2/6 cap structure in the amount of $224,500. What is the monthly payment during the initial period?

Question

amistre64 · Answer

do you have a monthly payment formula?  i tend to use my own setup

amistre64 · Answer

the monthly payments are the same for the initial period as they would be for a 30 year fixed loan

amistre64 · Answer

$$\Large B_o(k)^{30*12}~\frac{1-k}{1-k^{30*12}}=P$$
$$k=1+~.04/12$$

amistre64 · Answer

http://www.wolframalpha.com/input/?i=224500k%5E%2812*30%29%281-k%29%2F%281-k%5E%2812*30%29%29%2C+k%3D1%2B.04%2F12

amistre64 · Answer

what does the 2 under the 6 represent?

anonymous · Answer

2 is the % it can raise per year where as 6 is the limit of how much the interest can be raised thru the entire mortgage

anonymous · Answer

i got this - $1,184.99

amistre64 · Answer

"6/2 ARM" at 4% with a 2/6
 ^^^
  this one,   i recall what the other part is

im used to seeing a 1 under thehere and id conjecture to say it means that the rate is adjusted every 2 years after the initial 6 years period

amistre64 · Answer

at any rate, its the same payments for a fixed 30 year loan for the first 6 years

anonymous · Answer

I got the answer :) it's 1071.80

amistre64 · Answer

thats it :)

anonymous · Answer

thank you :)

amistre64 · Answer

youre welcome

anonymous · Answer

I need your help on 1 more thing

anonymous · Answer

A bank offers the following loans: 


Bank A	Bank B
$295,000 
25-year fixed 
6.275% 
2.25 discount points 
M = $1,950.59	$295,000 
25-year fixed 
6.5% 
0 discount points 
M = $1,991.86


What is the break-even point for the loans?
 about 13 years

 about 10 years

 about 15 years

 about 12 years