What is monthly mortgage payment for each of first five year

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Reference no: EM131606059

Your friend chose an ARM for the purchase of their new home. They would like to determine what the payment schedule will be. You decide to help and determine the following information to help you provide the answer. The contract rate is LIBOR – 1% where the current LIBOR rate is 4.00%. The mortgage is a 15 year 1/1 ARM 2/1/3. The purchase price of the home is $235,000 and the LTV of the mortgage is 70%.

You expect that LIBOR will be

3.25% in Year 1

4.50% in Year 2

5.50% in Year 3

6.50% in Year 4

4.00% in Year 5

A) What is the monthly mortgage payment for each of the first 5 years?

B) What is the amortization schedule for each of the first 5 years?

Reference no: EM131606059

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