Respuesta :
The interest rate in during the initial period is given from which the
monthly payment is calculated to be $1682.94
Response (approximate value):
- The monthly payment during the initial period is $1,682.94
What is an ARM and how does it determine the monthly payment?
The type of loan Jackie obtains is an Adjustable Rate Mortgage, ARM,
loan, which is a 4/2 ARM
Therefore;
The introductory interest rate of 5% is fixed for the first 4 years, and will
be adjusted every 2 years after the first four years.
[tex]Initial \ monthly \ payment, \ M = \mathbf{\dfrac{P \cdot \left(\dfrac{r}{12} \right) \cdot \left(1+\dfrac{r}{12} \right)^n }{\left(1+\dfrac{r}{12} \right)^n - 1}}[/tex]
Where;
M = The monthly payment during the initial period
P = The amount on loan = $313,500
r = 5% = 0.05
n = 30 × 12 = 360
Which gives;
- [tex]M = \dfrac{313500 \times \left(\dfrac{0.05}{12} \right) \cdot \left(1+\dfrac{0.05}{12} \right)^{360} }{\left(1+\dfrac{0.05}{12} \right)^{360} - 1} \approx \mathbf{1682.94}[/tex]
- The monthly payment during the initial period, M ≈ $1,682.94
Learn more about mortgage payment calculations here:
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