A 200000 30-year adjustable rate mortgage is made at an, Ask an Expert

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A $200,000 30-year adjustable rate mortgage is made at an initial annual interest rate of 12% with annual interest rate resets. The borrower and lender have negotiated a monthly payment cap of $1,600.

a. What will be the loan balance at the end of year 1?

b. If the interest rate increases to 13% at the end of year 1, how much interest will be accrued as negative amortization in year 2 if the payment cap remains at $1,600?

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92810441

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