You have taken out a $225,000, 3/1 ARM. The initial rate of 5.8% (annual) is locked in for 3 years and is expected to increase to 6.5% at the end of the lock period. Calculate the initial payment on the loan. (Note: the term on this 3/1 ARM is 30 years)
A) $1,320.19
B) $1,422.15
C) $1,874.45
D) $1959.99

Question

Quizplus · Accepted Answer

To calculate the initial payment on the loan, we can use a mortgage calculator. Using the given information, we can input $225,000 as the loan amount, 5.8% as the interest rate, and 30 years as the loan term. This gives us a monthly payment of $1,320.19.

Since the question asks for the initial payment on the loan, we can assume that it is due at the end of the first month of the loan. Therefore, the initial payment would be $1,320.19. This is the best choice given the information provided.

You Have Taken Out a $225,000, 3/1 ARM