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

question 42

Multiple Choice

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.

• A)A five-year closed convertible VRM at prime
• B)A five-year open VRM at prime plus one percent
• C)A five-year closed fixed rate mortgage at five percent
• D)A seven-year closed fixed mortgage at six percent

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Definitions:

Freud

Sigmund Freud was an Austrian neurologist who founded the psychoanalytic school of psychology, focusing on the unconscious mind, dreams, and the development of sexuality.

Guilty

The state of having committed a specified or implied offense or crime, often accompanied by feelings of remorse and repentance.

Psychoanalytic Theory

A theory developed by Sigmund Freud that emphasizes unconscious mental processes in shaping behavior, feelings, and personalities.

Superego

In psychoanalytic theory, the part of the mind that acts as a self-critical conscience, reflecting social standards learned from parents and teachers.