Velida took out a 5/1 variable-rate mortgage for $150,000. 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 Velidas monthly mortgage payment during the initial

fixed-rate period?

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ajeigbeibraheem ajeigbeibraheem · Answer 1 · 2020-12-15T03:05:12+01:00

Answer:

Velidas monthly mortgage payment will be $828.31

Step-by-step explanation:

From the information given:

The cost of mortgage = $150,000

Monthly interest rate = 5.25%/12= 0.0525/12 = 0.004375

Amortization period = (30 × 12) months = 360 months

The monthly mortgage payment can be determined by using the formula:

[tex]E = \dfrac{C \times r}{1 - ( 1+ r)^{-n}}[/tex]

[tex]E = \dfrac{150000 \times 0.004375}{1 - ( 1+ 0.004375)^{-360}}[/tex]

[tex]E = \dfrac{656.25}{1 - ( 1.004375)^{-360}}[/tex]

[tex]E = \dfrac{656.25}{1 -0.20772}[/tex]

[tex]E = \dfrac{656.25}{0.79228}[/tex]

E = $828.31