You just found your dream home for $375,000. You have $40,000 saved up for a down payment and now you are loan shopping. You have the following offers. 

a- A 15 year fixed mortgage at 6.25%

b- A 30 year fixed mortgage at 6.75%

c- A 5 year balloon mortgage in which you make payments of $20,000 per month and then have to pay off the balance owed at the end of the five years. 

 

Your monthly take home pay is $4500. Which option is right for you? (Include calculations, a clear statement of your choice, and a justification of your choice that refers to the calculations and your own comfort level with the risks and benefits. 

 

2. Some people have argued for a flat tax rate that is the same for all individuals, rather than the tax bracket system we have. Below shows five different taxable income amounts. Complete the following table using current tax brackets for the middle column and a flat tax rate of 10% for the right column. 

 

Taxable Income         Tax using brackets.         Tax using flat rate 

$10,000

$40,000

$100,000 

$400,000

$1,000,000 

 

Who benefits most from a tax bracket system? 

Who benefits most from a flat rate system?