A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments.The first two years of the loan have a "teaser" rate of 4%,after that,the rate can reset with a 5% annual payment cap.On the reset date,the composite rate is 6%.Assume that the loan allows for negative amortization.What would be the outstanding balance on the loan at the end of Year 3?

Question

Quizplus · Accepted Answer

The Answer of A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments.The first two years of the loan have a "teaser" rate of 4%,after that,the rate can reset with a 5% annual payment cap.On the reset date,the composite rate is 6%.Assume that the loan allows for negative amortization.What would be the outstanding balance on the loan at the end of Year 3?

A Borrower Takes Out a 30-Year Adjustable Rate Mortgage Loan