Compute the payment-loan balances and yield for the ARM

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Reference no: EM131867869

Assume that a lender offers a 30-year, $200,000 ARM with the following terms: initial interest rate= 7.5% index= one year treasuries payement reset each year Margin= 2% Interest rate cap= 1% annually and 3% lifetime discount points= 2% fully amortizing, however, negative amortization alllowed if interest rate caps reached based on estimated forward rates, the interest rate on the the index in year 2 is 9.5%. Compute the payment, loan balances and yield for the ARM in year 2.

Reference no: EM131867869

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