A Borrower Takes Out a 30-Year Adjustable Rate Mortgage Loan

question 30

Multiple Choice

A borrower takes out a 30-year adjustable rate mortgage loan for $200,000 with monthly payments.The first two years of the loan have a "teaser" rate of 4%,after that,the rate can reset with a 5% annual payment cap.On the reset date,the composite rate is 6%.What would the Year 3 monthly payment be?

• A)$955
• B)$1,067
• C)$1,003
• D)$1,186

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Definitions:

Root

The part of a plant that attaches it to the ground and absorbs nutrients and water from the soil.

Biopsy

A medical procedure that involves taking a small sample of tissue for examination to diagnose disease.

Abbreviation

A shortened form of a word or phrase used to save space or avoid repetition, commonly found in written language.

Bx

Short for biopsy, a diagnostic procedure that involves the extraction of sample cells or tissues for examination to determine the presence of disease.