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A 3/1 ARM is made for $150,000 at 7% with a 30 year maturity. Assuming that fixed payments are to be made monthly for three years and that the loan is fully amortizing, what will be the monthly payments?

Respuesta :

TomShelby

Answer:

Monthly paymenty for  $ 997.954

Explanation:

We have to calcualte for the PTM of the mortgage for the first three years at which the rate is fixed:

[tex]PV \div \frac{1-(1+r)^{-time} }{rate} = C\\[/tex]

PV $150,000

time 360 (30 years x 12 months)

rate 0.005833333 (7% annual / 12 months)

[tex]150000 \div \frac{1-(1+0.005833)^{-360} }{0.005833} = C\\[/tex]

C  $ 997.954

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