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Ltv ratio and have two mortgage choices

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Reference no: EM132234909

You are considering to buy a $250,000 property with a 80% LTV ratio and have two mortgage choices: a FRM or a FRM with an IO period. The lender offers the following two loans:

Loan 1: 30 year FRM, fully amortizing monthly payments; 4% interest

Loan 2: 30 year FRM with 4 year IO period, fully amortizing monthly payments; 4.15% interest

Put a yes next to all the true statements:

  • If I want to save on interest payments, I would choose Loan 2
  • If I want to minimize the payments in the first few years, I would choose Loan 2
  • If I'd like to pay off the loan sooner, I'd choose Loan 1
  • If I want my payments to remain the same for the duration of the loan, I would pick Loan 1

Reference no: EM132234909

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