Question
The Doe's have qualified for a mortgage of $500,000 to be amortized over 25 years. Their mortgage broker has offered them the following options: a.A
The Doe's have qualified for a mortgage of $500,000 to be amortized over 25 years. Their mortgage broker has offered them the following options:
a.A 5 year fixed rate with monthly payments at an annual interest rate of prime+1%
b.A 10 year fixed rate with biweekly payments at an annual interest rate of prime+2%
Prime is currently at 1.5% and projected to increase by 0.25% every year for the next 10 years.Which Mortgage terms should they accept given that their goal is to pay as much principle as possible over the next 10 years?
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Practical Financial Management
Authors: William R. Lasher
7th edition
128560721X, 9781133593669, 1133593682, 9781285607214, 978-1133593683
