Recalculating the monthly payment

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Reference no: EM131935798

Question: Assume you have a $165,000 outstanding amount on an adjustable-rate loan from Chase which amortizes over 10 years. According to your contract your monthly payment will be re-calculated every year based on most recent 10 yr. US Treasury interest rate (which is currently 2.55%) plus a 1.25% premium. Your monthly income allows you to pay up to $1750 per month. How much can the 10-year treasury interest rate increase before you can't afford to make the monthly payments? (Hint don't forget to add the premium)

Reference no: EM131935798

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