You Have Taken Out a $350,000, 3/1 ARM

Multiple Choice

You have taken out a $350,000, 3/1 ARM. The initial rate of 6.0% (annual) is locked in for 3 years. Determine the owner's equity in the property after 3 years if the market value of the property at the end of year 3 is $400,000. The interest rate after the initial lock period is 6.5%. (Note: the term on this 3/1 ARM is 30 years)

A) $13,705.75
B) $50,000.00
C) $63,705.75
D) $336,294.25