You have decided to buy a 2,000 square-feet house in Grapevine, close to a good public school. The average price in the area is $150 per square feet. The bank will finance 80% of the house value, so you need savings for the 20% down payment. You sign a 20 years 3/1 adjustable rate mortgage (ARM), which carries a 2.8% fixed rate for the first 3 years, and then (after 3 years) is adjusted to the 1-year LIBOR + 0.75 %. Question: How much are your monthly payments after the third year (when the loan is renegotiated) if the LIBOR is 3%?
$1,406.8
$1,307.1
$1,542.1
$1,485.7
$1,429.2
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