Choose a Mortgage Loan Banks and other lending institutions offer a wide variety of mortgage loans that can be tailored to the financial situations of most people who want to buy a house. Several of the more common types of mortgage loans are described below. • Conventional fixed-rate mortgages charge the same rate of interest over the term of the loan. They typically require a substantial down payment of 20 percent or more of the home's purchase price and have terms that can last from 15 to 30 years. • Adjustable-rate mortgages charge an interest rate that initially is lower than that charged on a conventional fixed-rate mortgage. This rate, however, will be adjusted as prevailing interest rates change. They also require a substantial down payment and have terms that last from 15 to 30 years. • Federal Housing Authority (FHA) mortgages are available to first-time homeowners at fixed interest rates that are normally similar to those charged on conventional fixed-rate mortgages. Because these loans are insured by the government, they require smaller down payments that can be as small as 5 percent of the purchase price. They typically have terms of 30 years. • Graduated payment mortgages require smaller payments when they are first taken out and then higher payments at later times. Their interest rates typically are slightly higher than conventional fixed-rate mortgages. They require relatively smaller down payments that can range from 10 to 20 percent. Their terms typically are for 30 years. Directions: Choose a mortgage loan that would be appropriate for each of the following individuals. 1. Alex and Meredith recently graduated from college and have both taken teaching jobs. Although they do not earn much income now, they expect to earn more in the future.
Choose a Mortgage Loan Banks and other lending institutions offer a wide variety of mortgage loans that can be tailored to the financial situations of most people who want to buy a house. Several of the more common types of mortgage loans are described below. • Conventional fixed-rate mortgages charge the same rate of interest over the term of the loan. They typically require a substantial down payment of 20 percent or more of the home's purchase price and have terms that can last from 15 to 30 years. • Adjustable-rate mortgages charge an interest rate that initially is lower than that charged on a conventional fixed-rate mortgage. This rate, however, will be adjusted as prevailing interest rates change. They also require a substantial down payment and have terms that last from 15 to 30 years. • Federal Housing Authority (FHA) mortgages are available to first-time homeowners at fixed interest rates that are normally similar to those charged on conventional fixed-rate mortgages. Because these loans are insured by the government, they require smaller down payments that can be as small as 5 percent of the purchase price. They typically have terms of 30 years. • Graduated payment mortgages require smaller payments when they are first taken out and then higher payments at later times. Their interest rates typically are slightly higher than conventional fixed-rate mortgages. They require relatively smaller down payments that can range from 10 to 20 percent. Their terms typically are for 30 years. Directions: Choose a mortgage loan that would be appropriate for each of the following individuals. 1. Alex and Meredith recently graduated from college and have both taken teaching jobs. Although they do not earn much income now, they expect to earn more in the future.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
Related questions
Question
Transcribed Image Text:Choose a Mortgage Loan
Banks and other lending institutions offer a wide variety of mortgage loans that can be tailored to the financial situations of most people who want to
buy a house. Several of the more common types of mortgage loans are described below.
• Conventional fixed-rate mortgages charge the same rate of interest over the term of the loan. They typically require a substantial down payment
of 20 percent or more of the home's purchase price and have terms that can last from 15 to 30 years.
• Adjustable-rate mortgages charge an interest rate that initially is lower than that charged on a conventional fixed-rate mortgage. This rate,
however, will be adjusted as prevailing interest rates change. They also require a substantial down payment and have terms that last from 15 to
30 years.
Federal Housing Authority (FHA) mortgages are available to first-time homeowners at fixed interest rates that are normally similar to those
charged on conventional fixed-rate mortgages. Because these loans are insured by the government, they require smaller down payments that can
be as small as 5 percent of the purchase price. They typically have terms of 30 years.
• Graduated payment mortgages require smaller payments when they are first taken out and then higher payments at later times. Their interest
rates typically are slightly higher than conventional fixed-rate mortgages. They require relatively smaller down payments that can range from 10
to 20 percent. Their terms typically are for 30 years.
Directions: Choose a mortgage loan that would be appropriate for each of the following individuals.
1. Alex and Meredith recently graduated from college and have both taken teaching jobs. Although they do not earn much income now, they expect to
earn more in the future.
Expert Solution
Step 1
Individuals are required to pay interest and the initial amount borrowed to the lender of loan. Various types of loans are available in the market therefore an individual should select the loan that best serves their needs and can be repaid by them easily.
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Solved in 3 steps
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