a. You are evaluating two mortgages-a fixed rate and adjustable rate. The $112,500 fixed rate mortgages terms are 4.75%, monthly pay, 30-year amortization. The 3/1, $112,500 adjustable-rate mortgage initial interest rate is 3.75%. Upon the first reset date the interest rate is now 5.50%. Determine the payments for both proposals for four years. Be sure to include the reset payment in year 4 of the adjustable-rate mortgage.

b. Insurance expenses are $600 per year. You have no other debt. If you earn $3,400 per year, which mortgage proposal works best for you?

c. In addition to the down-payment of $37,500, the following amounts must be paid at closing. NOTE: The one-time title insurance payment is 0.75% (3/4 of 1%) of the initial mortgage amount. Title insurance 0.75%, Legal $400, Recording fees $100, Misc $50. What is the total amount due at closing?