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You purchased a first home 5 years ago with a loan totaling $100,000 with a loan program of 5/1 ARM. Your current rate is 3.0% but it is time for an adjustment and your adjustable-rate terms indicate your rate cannot increase more than 2% annually or 6% for the life of your loan (what is often called a 2/6 ARM adjustment). Your ARM’s index rate is currently at 1.5%, your margin for this loan is 2.75% What will your rate adjust to and what is your new monthly payment going to be? Let’s assume your lender offers you an opportunity to lock your rate going forward at a rate of 3.75% but you must pay $1,000 for the ability to do this. Assuming you owe $80,000 on the note and will likely move in two years, do you accept the bank’s offer (remember – the note term is now 25 years not 30 years since you are five years in)