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? What is the remaining balance on the loan after three years?
$417
$518
$554
$632
$674
2. What is the remaining balance on the loan after three years?
$108,475
$115,358
$131,352
$137,935
$142,048
3. What is the greatest mortgage payment Raylan might owe when the interest rate resets at the beginning of the 4th year?
$509
$699
$551
$619
$659
PLEASE show all work!