You Have an Option on an ARM That Has a Two-Year

question 140

Multiple Choice

You have an option on an ARM that has a two-year adjustment interval,4% margin,2% periodic rate cap and a 6% lifetime cap.The current initial rate is 5.35%.You can also get a 30-year,fixed-rate mortgage for 6.65%.You plan on staying in this home for at least 10 years.What would be your best choice?

• A)Probably the ARM loan since your PITI would be lower.
• B)Probably the ARM loan since your PITI would be lower and the market rates of interest could get lower.
• C)Probably the fixed-rate loan because your PITI will be lower.
• D)Probably the fixed-rate loan because it is easier to budget for and it is less risky for you.

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Definitions:

Outcome Variance

The degree of variability in the results of a study or experiment, indicating the differences in outcomes across participants or conditions.

Technical Eclecticism

An approach in psychotherapy that involves selecting the best treatment techniques for the individual and their particular problem, without necessarily subscribing to the theoretical positions that underlie those techniques.

Predictive Models

Models that use historical data and statistical techniques to forecast future events or outcomes.

Common Factors

Elements present in various therapeutic modalities that contribute to the effectiveness of psychotherapy, such as therapeutic alliance and empathy.