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QUESTION
What are the annual loan payments and what is the effective borrowing cost?
What are the annual loan payments and what is the effective borrowing cost? If a lender offers a 15-year, $3,250,000 ARM with a starting rate of 6%. There is no prepayment penalty, a 1% periodic interest rate cap, and you plan to sell the property in 5 years. Interest rates are forecasted to be 5% in year 2, 6% in year 3, 8% in year 4, and 8.5% in year 5.
