Recalculate your results to parts a, b and c assuming the 5/1 ARM is an interest-only ARM for the first five years and will be fully amortized over the final 25 years.

3. A 5-year ARM (5/1 ARM) is a loan with a fixed rate for the first 5 years and a rate that subsequently changes once a year for its remaining life. Your lender locks in your rate for the first 5 years, but thereafter it changes on an annual basis moving up or down in […]

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