Question

You have an option on an ARM that has a two-year adjustment interval, 4% margin, 2% periodic rate cap and a 6% lifetime cap. The current initial rate is 5.35%. You can also get a 30-year, fixed-rate mortgage for 6.65%. You plan on staying in this home for at least 10 years. What would be your best choice?

Answer 1

Answer:

What would be my best choice is to choose the fixed-rate loan reason been that FIXED-RATE LOAN interest rate remain constant, meaning it does not varies during the period of the loan and the risks involved is lesser.

Explanation:

Based on the information given what would be my best choice is to choose the fixed-rate loan

reason been that FIXED-RATE LOAN interest rate remain constant, meaning it does not varies during the period of the loan and the risks involved is lesser.

Secondly I would choose the FIXED-RATE LOAN because it will enable me to properly predict what my future payments might likely be.