Question

Aimee and Ben are purchasing a condominium and are financing $415,500. The mortgage is a 20-year 3/1 ARM at 2.75% with a cap structure of 1.5/8. What will their payments be for the first 3 years?

$1,696.24

$2,252.70

$2,572.92

$3,475.41

Answer 1

do any of you know this topic?

Answer 2

@ganeshie8

Answer 3

prop 3

Answer 4

how do you know @beomsu.c.59131

Answer 5

Well, for a 20 year 3/1 ARM, you can just ignore that it's an ARM for the first 3 year.
Calculate the payment for a 20 year fixed 2.75%.

Answer 6

Why not ask the right answer how instead of the two wrong answers?

Answer 7

so how is c the answer @tkhunny

Answer 8

It isn't. Why do you think it is? Did you calculate it, ignore that it's an ARM?

Answer 9

but what equation do i use @tkhunny it would the monthly payment right?

Answer 10

Yes. Let's see it.

Answer 11

@tkhunny

Answer 12

Not sure what that formula is.

i = 0.0275
m = 12
j = i/m = 0.0022916666666666...
v = 1/(1+j) = 0.997713573061734...
n = 20 (years)

\(Pmt = \dfrac{415500}{\dfrac{v\left(1 - v^{n*m}\right)}{1 - v}}\)

That can be algebraically simplified a little, but that's it.

Answer 13

ok but i put the formula there @tkhunny

Answer 14

I still don't know what formula you posted. Define the terms and maybe we can make some sense of it.

Answer 15

It is the monthly payment formula

Answer 16

I solved it with your equation and I D? IS THAT RIGHT @tkhunny

Answer 17

You are going to have to show your work. I can't tell what you are doing if you don't show me. You still didn't define the terms in your monthly payment formula. Did you see how cleanly I laid them out?

Answer 18

Ok but do you want the definition but did i get it right at least?

Answer 19

You need to tell me if it is right. Confidence is part of what we are doing, here.

Answer 20

Yes I do feel it is right! @tkhunny I am just asking you because you have more knowledge than I do on the subject.

Answer 21

Well, I do like confidence, but you also have to be right. Show your work. Let's see where you wandered off.

Notice how I defined v in terms of the MONTHLY interest.

Answer 22

well i just plugged this in the calculator @tkhunny

Answer 23

There is no such thing as "just plugged". You did it in a certain order and you made certain assumptions. Just show your work.

Did you get the same j and v that I did? If you aren't using my formula, then show the results of your formula after defining the terms for me.

Answer 24

@Jesstho.-.

Answer 25

B