Fixed rate mortgage and arm mortgage

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Reference no: EM132000830

1. Consider a borrower who is contemplating either the 5-year variable open mortgage or the 5-year variable closed mortgage in the amount of $750,000 over the 25-year amortization period on January 17, 2018. Compute the prepayment penalties as a percent of the mortgage amount.

2. What is the difference between a 30-year fixed rate mortgage and an ARM mortgage? Why would a borrower choose one over the other?

3. Are markets fair? Does the average investor have a chance of meeting market returns? Are markets efficient across all investor segments? Any insight?

Reference no: EM132000830

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