The following problem involves adjustable-rate mortgage. You will need a table of monthly payments.
-Suppose your mortgage is $75,000 for 20 years. The index rate is 6.5% and the margin is 2.5%. Find the initial monthly payment.
A)$674.79
B)$487.50
C)$675.00
D)None of the above is correct.

Question

Quizplus · Accepted Answer

The initial interest rate for the adjustable-rate mortgage is calculated by adding the index rate (6.5%) to the margin (2.5%), which gives 9%. To find the initial monthly payment for a $75,000 mortgage over 20 years at 9% interest, you can use a mortgage calculator or a table of monthly payments for different interest rates and loan periods. The correct initial monthly payment is $674.79.

The Following Problem Involves Adjustable-Rate Mortgage