Question

Emina took out a 5/1 variable-rate mortgage for $120,000. The interest rate for the first period was fixed at 5.25%, and the loan was amortized over 30 years. At the end of the initial loan period, the interest rate was 6.75%, plus a 1.5% margin. What was Emina's monthly mortgage payment during the initial fixed-rate period? Show your work.

Answer 1

662.64

Explanation:

i got it wrong on apex and it told me the right answer. you're welcome.

Answer 2

$662.63

Explanation:

Cost of mortgage = $120,000

Interest rate of first period = 5.25%

The loan was amortized over 30 years.

The interest rate at the end of the initial loan period = 6.75%

Margin = 1.5%

The loan was amortized for over (30*12) months

= 360 months

The interest rate of the first period per month = 5.25% / 12

= 0.0525/12

= 0.004375

Payment for monthly mortgage =

(120000(0.004375)) / 1 - (1 + 0.004375)^-360

= 525 / 1 - (1.004375)^-360

= 525 / (1 - 0.2077)

= 525 /0.7923

= 662.63

= $662.63