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Question
Subprime loan underwriting as an alternative
The bank in (13) offers you a sub prime adjustable rate loan with 30 year amortization and a teaser rate of 2% for the first two years, maximum LTV of 90%. At the end of that period you can refinance or the rate adjusts to 3% over then current 10 year treasury. The 10 year T at the end of two years is forecast to be 6%. (At that point the remaining principal balance will amortize over the next 28 years). Do you qualify for the teaser loan? How much will your monthly payment rise at the reset date?
Answer
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Related questions
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General
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