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: #of Monthly Interest Rate Loan Term Points Payment Caps 15.5 percent fixed 30 years $953 5 percent fixed 30 years $902 3.5 percent fixed 15 years $1,201 4 4.75 percent ARM 30 years $876 1 percent/year, 5 percent total 5 5 4.75 percent ARM 30 years S876 O first two years/2 percent per year thereafter