Joe Smith, a young Engineer has planned to buy a house that they could afford. He and his

spouse have been saving even before getting married and have put away about $65,000.

The average price of a start up house or condo is about $550,000 here in Los Angeles, California.

They have the following options to take a Jumbo loan;

1. ) 30-years fixed (% 20 down)

Note rate: 3.75 %

Cost: 0.0 Points

2. ) 15-years fixed (% 20 down)

Note rate: 3.75%

Cost: 0.0 Points

3. ) 5-years ARM Interest only (zero down)

Note rate: 3.5% (first 5-years), then variable

Cost: 1.25 Points

a.) Total cost of loan

b.) Total interest to be paid

c.) The APR (including the cost of loan).

d.) The monthly payments.