Suppose you have a 30-year ARM with a balance at the EOY2 of $139,632 and a monthly payment for year 3 of $1239.88.If the margin is 2.50,what is the value of the index to produce this payment?

Question

Quizplus · Accepted Answer

The monthly payment formula for an ARM is based on the balance, interest rate (index + margin), and loan term. Solving for the index using the given payment, balance, and margin results in an index of 7.50%.

Suppose You Have a 30-Year ARM with a Balance at the EOY2