8. Tim wants to buy an apartment that costs $2,225,000 with an
85% LTV mortgage. Tim...
90.2K
Verified Solution
Link Copied!
Question
Finance
8. Tim wants to buy an apartment that costs $2,225,000 with an85% LTV mortgage. Tim got a 30 year, 3/1 ARM with an initial teaserrate of 3.75%. The reset margin on the loan is 300 basis pointsabove 1 year CMT. There are no caps. The index was 1% at the timeof origination. Tim also had to pay 6.5 points for this loan.
Compute the true APR (annualized IRR) for this loan.
Answer & Explanation
Solved by verified expert
3.8 Ratings (714 Votes)
Final answer Annualized IRR 450Detailed solution follows31 ARM means fixed rate for first three years and variable ratefrom fourth
See Answer
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
