Tom and Nancy want to buy a house in a particular neighborhood. They have two children ages 1 and 4. The average price home in this neighborhood runs about $350,000.Together their family income is $100,000.They have saved $75,000. The home they want to purchase is a newly constructed dwelling that costs $300,000.

Taxes on the home run $3.00 per $100 of assessed value of the home. For new homes the assessed value is equal to 75% of the purchase price. Insurance runs half of one percent of the home's assessed value.

Down payment for the conventional loan will be 20% and the ARM will be 10%.

.If the couple were to get the Adjustable Rate Mortgage (ARM) loan at 3.5% annually, what would their costs be?Calculate taxes and insurance costs based on values provided in the above Scenario.Compute the per month cost including interest, taxes, and insurance