What is the remaining balance on the loan after three years

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Reference no: EM13724969

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?

a. $417

b. $518

c. $554

d. $632

e. $674

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

a. $108,475

b. $115,358

c. $131,352

d. $137,935

e. $142,048

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

a. $509

b. $699

c. $551

d. $619

e. $659

Reference no: EM13724969

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