10 Jul 1- An interest only ARM is made for $180,000 for 30 years. The st

1- An interest only ARM is made for $180,000 for 30 years. The start rate is 7 percent, with a floor on interest rate of 6%, and the borrower will (1) make monthly interest only payments for 3 years. Payments thereafter must be sufficient to fully amortize the loan at maturity. (2/. )a. What will the payments be for the first 3 years?  b. Assume that at the end of year 3, the reset rate is 5 percent. What will payments be? 2- A partially amortizing mortgage is made for $60,000 for a term of 10 years. The borrower and lender agree that a balance of $20,000 will remain and be repaid as a lump sum at that time. If the interest rate is 7 percent, what must monthly payments be over the 10-year period? (2/. ) 3- A price level adjusted mortgage (PLAM) is made with the following terms: Amount $200,000, Initial interest rate 4 percent, Term 30 years, Payments to be reset at the beginning of each year. Assuming inflation is expected to increase at the rate of 6 percent at the end of year five. (4/. ) a. Compute the payments at the beginning of year 3(BOY3).b. What is the loan balance at the end of the fifth year?c. What is the yield to the lender on such a mortgage? 4- An investor is considering the acquisition of a “distressed property’’ which is on Northlake Bank’s REO list. The property is available for $200,000 and the investor estimates that the property will require the following total expenditures during the next year: Inspection $ 500 Title search  1,000Renovation 13,000Landscaping 800Insurance 1,800Property taxes 6,000Selling expenses  8,000 a- The investor is wondering what such a property must sell for after one year in order to earn a 20 percent return?  (2/. )b- Assume you are planning to own a residential property, which approach would you choose to make the best price estimate, and why? (2/. )