What is the loan effective annual rate

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Reference no: EM131870464

1. Teaser Rate Mortgage A mortgage broker is offering a 30-year mortgage with a teaser rate. In the first two years of the mortgage, the borrower makes monthly payments on only a 6.8 percent APR interest rate. After the second year, the mortgage interest charged increases to 11.6 percent APR. What is the effective interest rate in the first two years? What is the effective interest rate after the second year?

6.80%, 11.60% respectively

6.69%, 11.32% respectively

7.02%, 12.24% respectively

14.39%, 16.25% respectively

2. Effective Annual Rate A loan is offered with monthly payments and a 10.75 percent APR. What's the loan's effective annual rate (EAR)?

10.30%

11.30%

11.88%

17.23%

Reference no: EM131870464

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