Posted by **sweet** on Friday, October 22, 2010 at 6:20pm.

Consider the following scenario: John buys a house for $150,000 and takes out a five year adjustable rate mortgage with a beginning rate of 6%. He makes annual payments rather than monthly payments.

Unfortunately for John, interest rates go up by 1% for each of the five years of his loan (Year 1 is 6%, Year 2 is 7%, Year 3 is 8%, Year 4 is 9%, Year 5 is 10%).

Calculate the amount of John's payment over the life of his loan. Compare these findings if he would have taken out a fix rate loan for the same period at 7.5%. Which do you think is the better deal?

## Answer This Question

## Related Questions

- Finance - Consider the following scenario: John buys a house for $150,000 and ...
- finance - John borrows $150,000. The terms of the loan are 7.5% over the next 5 ...
- Finance - A mortgage broker is offering a $225,000 30-year mortgage with a ...
- finance - The beginning of January 2006, a couple bought a $120,000 house with ...
- accounting - John borrows $150,000. The terms of the loan are 7.5% over the next...
- accounting - House mortgage You have just purchased a house and have obtained a...
- Finance - Say that you purchase a house for $270,000 by getting a mortgage for $...
- Finance - 12. Your current $155,000 mortgage calls for monthly payments over 25 ...
- Finance - Dave takes out a 30-year mortgage of 200000 dollars for his new house...
- MATH - Dave takes out a 24-year mortgage of 210,000 dollars for his new house. ...

More Related Questions