Variable rate mortgage quiz

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Reference no: EM131566116

Variable Rate Mortgage Quiz

Jeff's Mortgage Company is offering you a 30 year, $200,000 variable rate mortgage with an introductory rate of 5% for the first year (12 months). Interest rates for the following years pegged at 2 over the 1-year LIBOR rate prior to the new year. Jeff is using the following LIBOR rates to calculate your interest.

1 yr. LIBOR rate year

7% 2

5% 3

1. What is the monthly payment for year 1?

2. What is the monthly payment for year 2?

3. What is the monthly payment for year 3?

4. What is the balance on this loan at the end of 3 years (36 payments)?

5. How much interest was paid to Vulcan during the first 3 years (36 payments) at this loan?

Reference no: EM131566116

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