Rate will change annually to reflect market conditions

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Reference no: EM13769014

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’s initial mortgage payment? What is the remaining balance on the loan after three years?

$417

$518

$554

$632

$674

2. What is the remaining balance on the loan after three years?

$108,475

$115,358

$131,352

$137,935

$142,048

3. What is the greatest mortgage payment Raylan might owe when the interest rate resets at the beginning of the 4th year?

$509

$699

$551

$619

$659

PLEASE show all work!

Reference no: EM13769014

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