Pregunta
Lisa bought a home with an adjustable-rate mortgage. The margin on the loan is
rate is
Select one:
a.
b.
c.
rate is
Select one:
a.
b.
c.
Ask by Franklin Best. in the United States
Mar 21,2025
Solución de inteligencia artificial de Upstudy
Respuesta verificada por el tutor
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The calculated interest rate of the ARM is
Solución
-
The general formula for an adjustable-rate mortgage (ARM) is:
-
Given:
-
Substitute the given values into the formula:
-
The rate cap of
over the life of the loan means the interest rate cannot exceed the initial rate by more than . However, in this case, the addition of the margin and the current index rate results in , which is within the allowed limit under normal circumstances, hence no further adjustment is needed. -
Therefore, the calculated interest rate of the ARM is:
The correct answer is b.
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Simplifique esta solución Beyond the Answer
To calculate the interest rate of an adjustable-rate mortgage (ARM), you add the margin to the current index rate. Here, the current index rate is
So,
Therefore, the correct answer is:
b.
b.
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