Raylan Givens borrows $150,000 to buy a house. The adjustable rate mortgage carr
ID: 2639797 • Letter: R
Question
Raylan Givens borrows $150,000 to buy a house. The adjustable rate mortgage carries a 1.5 percent rate for the first 3 years. After that the rate will change annually to reflect market conditions. The annual cap is 2% (i.e., the largest increase in any year is 2%). The loan term is 30 years and payments are made monthly.
1.) What is Raylan
Explanation / Answer
1> Interest per month=1.5/12 0.125 Interest Factor=(1.00125)^(30*12) 1.568 Monthly Instalment=P*i*F/(F-1)=150000*0.00125*1.568/(1.568-1) 517.61 Ans: b say 518 2> Remaining balance after 3years=150000-518*12*3 131352 Ans:c 3> Interest per month=3.5/12 0.292 Interest Factor=(1.00292)^(30*12) 2.86 Monthly Instalment=P*i*F/(F-1)=150000*0.00292*2.86/(2.86-1) 673.48
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