Mortgage Loans

One loan is 30 years fixed at 5% rate with monthly payment m$. The second loan is 5/1 ARM (first 5 year is fixed at 5% then it becomes adjustable). For the second loan, the borrower is told he can pay m$ monthly or pay n$ monthly so that he can pay it off in 5 years. Both loans do not have pre-payment panelty.

The question is if the borrower take the first loan and pay n$ each month, can he pay it off in 5 years?

If the answer is no, please explain why.

所有跟帖： 

• 回複：Mortgage Loans -Commentate- ♂ (176 bytes) () 12/01/2009 postreply 11:50:33

• This question is not about wording tricks. -yma16- ♂ (662 bytes) () 12/01/2009 postreply 14:49:22

• 回複：Mortgage Loans -yma16- ♂ (241 bytes) () 12/03/2009 postreply 15:49:02

• 回複：回複：Mortgage Loans -yma16- ♂ (161 bytes) () 12/04/2009 postreply 10:43:49

• The loans officer was correct. -commentate- ♂ (0 bytes) () 12/04/2009 postreply 17:17:34

• Although it makes sense to use the -yma16- ♂ (124 bytes) () 12/04/2009 postreply 19:43:54

• 回複：Mortgage Loans - YES! -MovingTarget- ♂ (358 bytes) () 12/07/2009 postreply 22:14:13

• don't need any math, just consider the cashflows and -外-國人- ♂ (303 bytes) () 12/13/2009 postreply 18:50:29

• Most people in the bank are math idiots. -ProfessionalEngineer- ♂ (375 bytes) () 12/10/2009 postreply 06:01:53