Assignment:
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?
Provide complete and step by step solution for the question and show calculations and use formulas.