One of Andrew and Cynthias goals is to buy a bigger house. Since mortgage rates have fallen significantly, they want to look into purchasing the home earlier than expected. Cynthia will also receive a $18,000 inheritance to contribute towards the down payment and the closing costs of the house. The house they want to buy costs $177,550, and they plan to put 20% down. They have made a few phone calls and found that Guaranty Federal Savings is offering very competitive financing terms. Andrew and Cynthia were offered the following mortgage terms: 15-year fixed-rate mortgage 6.45% interest with .5 discount point Other closing costs and prepaid items of $5,500 (this includes a 1% loan origination fee) Monthly payments 15-year adjustable-rate mortgage 6.95% interest with 3 discount points Other closing costs and prepaid items of $5,500 (this includes a 1% loan origination fee) 1.5% annual interest rate cap 6% overall interest rate cap Monthly payments 1. Compare and evaluate the two mortgage alternatives for Andrew and Cynthia. What would be the front-end costs and the monthly payments for principal and interest on each of these mortgages? How much could the monthly payments for principal and interest go up on the adjustable-rate mortgage after the first year? Over the lifetime of the loan? Keeping in mind their financial situation and risk tolerances, which mortgage would you recommend for them? Why