What is the maximum interest rate

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Q1. A bank advertises a 3/1 ARM at 4.65% with a 3/9 cap. What is the maximum interest rate that can be charged during the fifth year?

A. 3%

B. 4.65%

C. 9%

D. 10.65%

Q2. Aimee and Ben are purchasing a condominium and are financing $365,000. The mortgage is a 15-year 3/1 ARM at 6.25% with a cap structure of 1.5/8. What will their payments be for the first 3 years?

A. $3,488.13

B. $3,435.66

C. $3,129.59

D. $2,247.37

Q3. Kristi and Jason are purchasing a house and are financing $355,000. The mortgage is a 30-year 6/2 ARM at 3.25% with a 3/6 cap structure. What will the remaining balance be after the first 6 years?

A. $317,038.99

B. $286,556.77

C. $308,679.17

D. $331,347.21

Q4. Wendy is purchasing a condominium and is financing $595,000 with a 20-year 6/1 ARM at 5.65% with a 1/8 cap structure. What will her payments be at the beginning of year 7?

A. $4400.65

B. $4143.50

C. $3623.48

D. $3344.70

Q5. Bart and April are purchasing a house with a 15-year, 2/1 ARM for $315,000 at 5.85% with a 2/8 cap structure. What will the difference in payments be from year 2 to year 3?

A. $309.69

B. $595.18

C. $333.68

D. $86.56

Reference no: EM132829507

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