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Mortgage Tables

Table 1:  Current Mortgage Rates

Type of Mortgage Current (Overnight Average)
30 Year Fixed Rate Mortgage

%
15 Year Fixed Rate Mortgage

%
5/1 Adjustable Rate Mortgage (On this particular ARM, the rate stays constant for 5 years, then adjusts annually)

%
Table 2:  Fixed or Adjustable-Rate Mortgage (ARM)?(Choose which mortgage would be more appropriate in each of the following circumstances and justify your choice; assume the rate on the ARM adjusts annually from the very beginning of the mortgage.) 

Circumstance

Fixed (F) or Adjustable (A) Rate

Justification (Cite a quote from the bankrate.com lessons as a part of two of your justifications)

(A)   You plan to live in the house for three years.

 

 

(B)    You expect to be on a very tight budget during the next several years.

     

 

(C)    You tend to have a low risk tolerance.

     

(D)    You expect mortgage rates to continue the trend of the past year.  To learn the trend of mortgage interest rates, view the Mortgage Rate Trends for 30 and 15 year fixed rate mortgages and the one year ARM (over the one year period) at the Mortgage-X Web site.       

    
Table 3:  How Much Can You Borrow?

Type of Mortgage

Maximum Loan Amount You Can Borrow

       Maximum Monthly  Mortgage Payment You Can Afford
30-Year Fixed-Rate Mortgage

 

  
15-Year Fixed- Rate Mortgage    
1-Year Adjustable-Rate Mortgage (to be paid back over 30 years)    

Table 4:  Home and Mortgage Choice ($75,000 Mortgage)

Type of Mortgage Monthly Mortgage Payment Total Interest Paid Over the Life of the Loan
30-Year Fixed-Rate Mortgage  
15-Year Fixed Rate Mortgage  
Based on the data in this table and the Table 3:  How Much Can You Borrow?, which loan would you qualify for if you bought the $93,500 home and thus had a mortgage of $75,000?  Explain.

 
Table 5:  Home and Mortgage Choice ($50,000 Mortgage)
Type of Mortgage Monthly Mortgage Payment Total Interest Paid Over the Life of the Loan
30-Year Fixed-Rate Mortgage    
15-Year Fixed-Rate Mortgage    
Based on the data in this table and Table 3:  How Much Can You Borrow?, which loan would you choose if you bought the $62,500 home and thus had a mortgage of $50,000.  Justify your choice.

 

As a result of completing the analysis above, which house and which mortgage would you choose?  Explain.

 
In a few years, you will more than likely actually be involved in buying a home and choosing a mortgage.  List at least two important concepts or principles that you feel you have learned as a result of completing this financial choice which will help you in choosing a mortgage.