Decide whether the following statement makes sense (or is clearly true) or does not make sense (or is clearly false)
Posted: Mon Jul 11, 2022 12:50 pm
Decide whether the following statement makes sense (or isclearly true) or does not make sense (or isclearly false). Explain your reasoning.
I had a choice between a fixed rate mortgage at 6% and anadjustable rate mortgage that started at 3% for the firstyear with a maximum increase of 1.5 percentage points a year. Itook the adjustable rate, because I'm planning to movewithin three years.
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Part 1
Choose the correct answer below.
A.
The statement makes sense. The monthly payment for theadjustable rate mortgage is guaranteed to be lower for the firstthree years of the loan term.
B.
The statement does not make sense. Adjustable rate mortagesusually have higher monthly payments at the beginning of the termthan at the end of the term.
C.
The statement makes sense. For adjustable rate mortgages,the first three years worth of payments go almost entirely towardprincipal.
D.
The statement does not make sense. The average monthly paymentfor the adjustable rate mortgage will be higher over the firstthree years than the fixed rate mortgage
I had a choice between a fixed rate mortgage at 6% and anadjustable rate mortgage that started at 3% for the firstyear with a maximum increase of 1.5 percentage points a year. Itook the adjustable rate, because I'm planning to movewithin three years.
Question content area bottom
Part 1
Choose the correct answer below.
A.
The statement makes sense. The monthly payment for theadjustable rate mortgage is guaranteed to be lower for the firstthree years of the loan term.
B.
The statement does not make sense. Adjustable rate mortagesusually have higher monthly payments at the beginning of the termthan at the end of the term.
C.
The statement makes sense. For adjustable rate mortgages,the first three years worth of payments go almost entirely towardprincipal.
D.
The statement does not make sense. The average monthly paymentfor the adjustable rate mortgage will be higher over the firstthree years than the fixed rate mortgage