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Fiona is purchasing a condominium for $305,000 with a 30 year 5/1 ARM at 4.65% with...

Fiona is purchasing a condominium for $305,000 with a 30 year 5/1 ARM at 4.65% with 1/12 cap, what would be her payment beginning year 6.

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Answer #1

Formula :

P = L[c(1 + c)n]/[(1 + c)n - 1]

The above formula is used to calculate the fixed monthly payment (P) required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of c. [If the quoted rate is 6%, for example, c is .06/12 or .005].

Mortgage Information

Loan amount

$305,000.00

Term

30 years

Starting interest rate

4.65%

First monthly payment

$1,572.69

Interest rate cap

12%

Expected adjustment

0.25%

Rate remains fixed for

60 months

Periods between adjustments

12 months

Total payments

$688,222.05

Total interest

$383,222.05
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