Aimee and Ben are purchasing a condominium and are financing $415,000. The mortgage is a 20-year 3/1 ARM at 2.75% with a cap structure of 1.5/8. What will their payments be for the first 3 years?
When posting questions such as this one, you should explain terms and phrases and what they stand for!. More specifically, what does "3/1 with a cap structure of 1.5/8" mean? My understanding is that the mortgage is amortized over a period of 20 years @ 2.75% with the initial term of 3 years. Thereafter, the rate will be adjusted by 1.5% every year. Is 8 the cap on the number of years or the cap on interest rate??? Do you actually understand it? It must be in your textbook. So, gives us some feedback as to what you think it means, so that we may be able to help you. It may be "standard language" on mortgages in the U.S., but somebody from another country may not be familiar with the language used.
+295 Hey I don't know if you noticed but I answered a problem similar to this one and the answer to this is $2,252.70.
