Refer to Narrative 14-1. The margin on an adjustable-rate mortgage is 5.5% and t

Question

Refer to Narrative 14-1. The margin on an adjustable-rate mortgage is 5.5% and the rate cap is 6.55% over the life of the loan. If the current index rate is 6.25%, what is the calculated interest rate of the ARM?

Answer

12.2%

11.75%

11.0%

9.25%

Refer to Narrative 14-1. Fredrick bought a home with an adjustable-rate mortgage. The margin on an adjustable-rate mortgage is 3.5% and the rate cap is 5.25% over the life of the loan. If the current index rate is 7.9%, what is the calculated interest rate of the ARM?

Answer

11.4%

11.5%

9.9%

8.6%

Refer to Narrative 14-1. Evelynn has a home that was recently appraised for $127,000, and the balance on the existing mortgage is $88,350. If a bank is willing to loan up to 75% of the appraised value, calculate the potential amount of credit available on a home equity loan.

Answer

$2,550.00

$69,000.00

$70,900.00

$8,650.00

12.2%

11.75%

11.0%

9.25%

Explanation / Answer

1.   c.   11.0%

2.d.   8.6%

3.a.   $2,550.00

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