Question

Rachel is purchasing a condominium and is financing $485,000 with a 30-year 6/1 ARM at 4.95% with a 1/10 cap structure. What will her payments be at the beginning of year 7?

$2845.65

$2588.78

$2598.90

$2326.22

Answer 1

gonna have to restructure it a few times ....

Answer 2

6 years at the usual fixed rate

restructure for the 6th year and the remaining time at +1%

restructure again for the 7th year and the remaining time at +2%

Answer 3

excel is nice for this run .... or you can split it up for the calcs

Answer 4

Po = 485000k^(12*30)(1-k)/(1-k^(12*30)), k=1+.0495/12

B6 = 485000k^(12*6) - Po (1-k^(12*6))/(1-k), k=1+.0495/12

rework new payments with 30-6 years left at .0595

Answer 5

so the new balance is about 435 809

http://www.wolframalpha.com/input/?i=485000k%5E%2812*6%29+-%28485000k%5E%2812*30%29%281-k%29%2F%281-k%5E%2812*30%29%29%29%281-k%5E%2812*6%29%29%2F%281-k%29%2C+k%3D1%2B.0495%2F12

Answer 6

P1 = 435809k^(12*24)(1-k)/(1-k^(12*24)), k=1+.0595/12

B7 = 435809k^(12) - Po (1-k^(12))/(1-k), k=1+.0595/12

http://www.wolframalpha.com/input/?i=435809k%5E%2812%29+-+%28435809k%5E%2812*24%29%281-k%29%2F%281-k%5E%2812*24%29%29%29+%281-k%5E%2812%29%29%2F%281-k%29%2C+k%3D1%2B.0595%2F12

so we resturcture for payments using 427364 and .0695 interest for 23 years

Answer 7

P2 = 427364k^(12*23)(1-k)/(1-k^(12*23)), k=1+.0695/12

http://www.wolframalpha.com/input/?i=427364k%5E%2812*23%29%281-k%29%2F%281-k%5E%2812*23%29%29%2C+k%3D1%2B.0695%2F12

so about 3106 is what i get .. and some errors might have crept in

Answer 8

is that ur final?

Answer 9

because i dont have any of those choices

Answer 10

yeah, but id rather run an excel on it

Answer 11

okay :)

Answer 12

just let me know as soon as u know

Answer 13

thanks :)

Answer 14

i might have gone a year to far to begin with

2588 is the payments for the intial term first 6 years, then it bumps by 1 more year, not 2 years

so 2845 looks fine

Answer 15

okay could u help with 3 more questions please :)

Answer 16

Please please (:

Answer 17

Brent and Amanda are purchasing a house with a 30-year, 4/1 ARM for $395,000 at 4.65% with a
3/10 cap structure. What will the difference in payments be from year 4 to year 5?

$1,282.03

$883.47

$576.77

$686.49

Answer 18

ive already given you all the tools needed to assess the next one

determine the payments for the initial period, and subtract the payment for the next resturcture to find the difference

Answer 19

A bank advertises a 3/1 ARM at 4.65% with a 3/9 cap.

What is the maximum interest rate that can be charged during the fifth year?

3%

4.65%

9%

10.65%