Chapter $5$

Financial Planning Exercise $11$

Conventional vs$.$ ARM mortgage payments

Use Exhibit $5\mathrm{.}9.$ What would the monthly payments be on a $$65,000$ loan if the mortgage were set up as:

a$.$ A $15-$year, $8$ percent fixed$-$rate loan? Round the answer to the nearest cent.

b$.$ A $30-$year adjustable$-$rate mortgage $($ARM$)$ in which the lender adds a margin of $2\mathrm{.}5$ to the index rate, which now stands at $5\mathrm{.}5$ percent? Find the monthly mortgage payments for the

first year only. Round the answer to the nearest cent.

$

per month