isk$-$Return Trade$-$off Analysis:

$30-$Year Fixed$-$Rate: This option has a lower interest rate compared to the Bakers' current mortgage, but it also requires $$1,000$ cash at closing. This option has a lower interest rate, which will result in lower monthly payments for the Bakers. However, the $30-$year term means that they will be paying on their mortgage for a longer period of time. Additionally, the lower rate will result in a lower return for the company, meaning lower profits and lower commission for the originator.

$15-$Year Fixed$-$Rate: This option has the lowest interest rate of the three options, but it also requires the highest amount of cash at closing $($$$5,000).$ This option has the advantage of a shorter term, which will result in a faster pay$-$off and lower interest costs over the life of the loan. However, the shorter term also means higher monthly payments, which may be a burden for the Bakers. Additionally, the lower rate and shorter term will result in a lower return for the company and the originator.

$5/1$ ARM: This option has a lower interest rate compared to the Bakers' current mortgage and the $30-$Year Fixed$-$Rate option, but it also requires a higher amount of cash at closing $($$$4,500).$ This option has the advantage of a lower rate, which will result in lower monthly payments for the Bakers. However, the adjustable rate nature of the loan means that the rate could increase in the future, which could result in higher monthly payments. Additionally, the lower rate and adjustable nature of the loan will result in a lower return for the company and the originator.

Explanation:

Please refer to the solution in this step

Answer

Recommendation:

Based on the analysis, it is recommended that the Bakers consider the $30-$Year Fixed$-$Rate option. While this option requires $$1,000$ cash at closing, it provides a lower interest rate and a longer term, which will result in lower monthly payments. Additionally, this option provides a higher return for the company and the originator, which is important for the financial stability of the firm and the originator's livelihood.

From a financial perspective, this option provides a balance of lower interest costs and lower monthly payments. From a logical perspective, this option provides stability and predictability for the Bakers, as they will know exactly what their monthly payments will be for the next $30$ years.

From an ethical and Biblical perspective, it is important to provide excellent service to the Bakers while also being responsible stewards of the resources provided by the company. By recommending the $30-$Year Fixed$-$Rate option, the originator is able to balance these considerations and provide the best advice for the Bakers.