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A borrower is offered a 30 year, fully amortizing ARM with an initial rate of 3.35%....

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Finance

A borrower is offered a 30 year, fully amortizing ARM with aninitial rate of 3.35%. After the first year, the interest rate willadjust each year, using 1 yr LIBOR as the index, plus a margin of175bp. The price of the property is $8,000,000 and the loan willhave an initial LTV ratio of 75% At the first reset date, 1 yearLIBOR is at 3%. What is the borrower s payment during the 2nd yearof the loan?

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Initial Interest Rate 335 Tenure 30 years Property Price 800000 LTV 75 Mortgage Amount LTV x Property Price 075 x 800000 600000 Let the first annual repayment be p this will be calculated using the    See Answer
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A borrower is offered a 30 year, fully amortizing ARM with aninitial rate of 3.35%. After the first year, the interest rate willadjust each year, using 1 yr LIBOR as the index, plus a margin of175bp. The price of the property is $8,000,000 and the loan willhave an initial LTV ratio of 75% At the first reset date, 1 yearLIBOR is at 3%. What is the borrower s payment during the 2nd yearof the loan?

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