The Does have qualified for a mortgage of $500,000 to be amortized over 25 years. Their mortgage

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Question:

The Does have qualified for a mortgage of $500,000 to be amortized over 25 years. Their mortgage broker has offered them the following options:

a. Two consecutive 5-year terms with a fixed rate with monthly payments at an annual interest rate of prime+1% compounded monthly.

b. A single 10-year fixed rate term with biweekly payments at an annual interest rate of prime+1.25% compounded annually. Prime is currently at 1.5% and is projected to increase by 0.25% every year for the next 10 years. which mortgage terms should they accept given that their goal is to pay as much principle as possible over the next 10 years?