Which mortgage option is best in the following scenario? The Wongs are purchasing their first home for $250,000 and financing with a $200,000 mortgage. They expect interest rates to stay the same for the next seven years at least, expect no increase in their incomes, and prime rate is three percent. Their primary goal is to pay down the principal as quickly as they can, and they can afford monthly mortgage payments of $1200.

Question

Quizplus · Accepted Answer

A five-year closed convertible VRM at prime allows the Wongs to benefit from the current low interest rate of three percent, which aligns with their expectation of stable rates. This option helps them pay down the principal faster with their $1200 monthly payments.

Which Mortgage Option Is Best in the Following Scenario? the Wongs