Which mortgage option is best in the following scenario? The Wongs are purchasing their first home for $250,000 and financing with a $200,000 mortgage. They expect interest rates to stay the same for the next seven years at least, expect no increase in their incomes, and prime rate is three percent. Their primary goal is to pay down the principal as quickly as they can, and they can afford monthly mortgage payments of $1200.

Select one:

a. A five-year closed convertible VRM (variable rate mortgage) at prime

b. A seven-year closed fixed mortgage at six percent

c. A five-year open VRM at prime plus one percent

d. A five-year closed fixed rate mortgage at five percent