Calculating new monthly payments for an ARM mortgage
Not what you're looking for?
Please help with the following problem.
Kris and Chris are purchasing a home for $100,000. they are seeking a mortgage loan for $80,000 or 80% loan to cost. The bank offered them an ARM mortgage starting at 6% for the first year, the rate adjusts every year thereafter, and is amortized using a 30 year schedule. After 1 year the rate increases to 7%, what is the new payment?
Purchase this Solution
Solution Summary
Tthis posting helps with a basic algebra problem. The solution describes the steps to calculate new monthly payments for an ARM mortgage after one year.
Solution Preview
Please refer attached file for better clarity of tables.
Solution:
Loan Amount=P=100000*80%=$80000
Interest Rate=i=6%/12=0.50% per month
Number of periods=n=12*30=360
Monthly Payments=R=?
R=(P*i)/(1-1/(1+i)^n)
=80000*0.5%/(1-1/(1+0.5%)^360)
=$479.64
Installment # Loan Amount Rate of Interest Interest Total Due Amt Paid Balance
1 80000.00 0.50% 400.00 80400.00 479.64 79920.36
2 ...
Education
- BEng (Hons) , Birla Institute of Technology and Science, India
- MSc (Hons) , Birla Institute of Technology and Science, India
Recent Feedback
- "Thank you"
- "Really great step by step solution"
- "I had tried another service before Brain Mass and they pale in comparison. This was perfect."
- "Thanks Again! This is totally a great service!"
- "Thank you so much for your help!"
Purchase this Solution
Free BrainMass Quizzes
Know Your Linear Equations
Each question is a choice-summary multiple choice question that will present you with a linear equation and then make 4 statements about that equation. You must determine which of the 4 statements are true (if any) in regards to the equation.
Multiplying Complex Numbers
This is a short quiz to check your understanding of multiplication of complex numbers in rectangular form.
Probability Quiz
Some questions on probability
Geometry - Real Life Application Problems
Understanding of how geometry applies to in real-world contexts
Solving quadratic inequalities
This quiz test you on how well you are familiar with solving quadratic inequalities.