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    JesusisLord's Avatar
    JesusisLord Posts: 4, Reputation: 1
    New Member
    		  
    #1

    Jul 29, 2008, 07:39 PM
    Desperately need this ASAP! Pleading.
    John buys a house for $150,000 and takes out a five year adjustable rate mortgage with a beginning rate of 6%. He makes annual payments rather than monthly payments.

    Interest rates go up by 1% for each of the five years of his loan (Year 1 is 6%, Year 2 is 7%, Year 3 is 8%, Year 4 is 9%, Year 5 is 10%).

    Calculate the amount of John's payment over the life of his loan. Compare these findings if he would have taken out a fix rate loan for the same period at 7.5%. Which do you think is the better deal?
    twinkiedooter's Avatar
    twinkiedooter Posts: 12,172, Reputation: 1054
    Uber Member
    		  
    #2

    Jul 29, 2008, 07:43 PM
    I think you need to do your own home work assignments. Sorry.

    I think the best deal would be to buy the house outright with no interest.
    iAMfromHuntersBar's Avatar
    iAMfromHuntersBar Posts: 943, Reputation: 146
    Senior Member
    		  
    #3

    Jul 30, 2008, 12:34 AM
    As twinkiedooter said, we won't outright give you the answers to what seems to be homework. If you give it a go and then post your answers here, people will nudge you in the right direction.

    Just as a pointer, have a look at this page under compound interest;
    BBC - GCSE Bitesize - Maths | Number | Cumulative increase and decrease

    Hope that at least gets you on the right path!
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