What would be the monthly payment in the third loan year

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Reference no: EM131916323

A borrower takes out a 10-year interest only mortgage loan for $600000 with monthly payments. In the first two years the loan has an a “teaser” rate of 1%, after which the rate resets each year with 2% annual and 5% lifetime rate caps. On the first reset date, the fully indexed rate is 6%. What would be the monthly payment in the third loan year?

a. 3000

b. 2500

c. 1500

d. Because of the interest rate caps, the monthly payment would not changes.

Reference no: EM131916323

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