1 Discuss the disadvantages of a 15-year mortgage? 2 Janice and Ronald have decided to finance their first home with First American Bank. They are buying their home for $210,000 and making a 20 percent down payment. They will also be paying $3,000 in closing costs. First American has offered them the following mortgage alternatives: Interest Rate 5.5 percent fixed Caps Monthly Payment $953 Loan Term # of Pts 1 1 30 years 2 5 percent fixed 30 years 2 $902 3 3.5 percent fixed 15 years 1 $1,201 4 4.75 percent ARM 30 years 2 $876 1% per year SX total 5 4.75 percent ARM 30 years 2 $876 O first 2 years 2 per year thereafter Assuming the taxes and insurance on this home will be $150 per month and the lender requires a front-end ratio of 0.31, how much will Janice and Roland's monthly gross income need to be to qualify for loan 1? 3 Use above information from #2, assuming Janice and Ronald are willing to accept the higher risk of the loan 4 adjustable-rate mortgage (ARM), what is the highest possible interest rate they would be paying after three years? Use above information from #2, if Janice and Ronald choose loan 3, how much will their total outlay be when they close