1. You get a 30-year ARM at a rate of 5.25%. The rate is adjusted each year to the 1-year T-bill rate plus ½%. The loan has a 1% annual cap. One year later the T-bill rate is 5.23%. In 2 years the T-bill rate is 6.47%. What is your interest rate for the third year?
5.25%
5.73%
6.97%
6.73%
2. You get a 30-year mortgage loan of $185,000 at 5% interest. You make your first payment on March 1. Use your financial calculator to calculate the calendar-year interest for Year 2.
$9,188.02
$9,048.38
$7,666.19
$9,072.14