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Adjustable-rate mortgage loan

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Reference no: EM133306349

Assume the following items for a one-year adjustable- rate mortgage loan (monthly compounding) that is tied to the index rate:

Loan amount: $200,000

Life of loan rate cap : 5%

First year teaser rate:4%

Current index rate: 5.45%

Annual periodic rate cap:2%

Margin: 2.5%

Amortization term in years: 30

Index rate at the end of year 1: 5% ( forecasted value)

Index rate at the end of year 2: 5.25% (forecasted value)

Given above assumptions, calculate the follows:

a. Initial monthly mortgage payment.

b. Loan balance at the end of year 1

c. Year 2 monthly mortgage payment

d. Year 3 monthly mortgage payment

Reference no: EM133306349

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