Assume the following for a one-year rate adjustable rate mortgage loan that is tied to the one-year Treasury rate:
Loan amount: ...............$150,000
Annual rate cap: .............. 2%
Life-of-loan cap: ..............5%
Margin: ................... 2.75%
First-year contract rate: ............ 5.50%
One-year Treasury rate at end of year 1: ......5.25%
One-year Treasury rate at end of year 2: ......5.50%
Loan term in years: ..............$30
Given these assumptions, calculate the following:
a. Initial monthly payment
b. Loan balance end of year 1
c. Year 2 contract rate
d. Year 2 monthly payment
e. Loan balance end of year 2
f. Year 3 contract rate
g. Year 3 payment