Question

(Mortgage Loans LC)

A bank offers three mortgages shown:

Option 1: Balloon mortgage at 5% with terms 30/5

Option 2: Fixed rate mortgage at 3% for 30 years

Option 3: Adjustable rate mortgage at 4% for 15 years with terms 3/1 and a cap of 2/8

Which mortgage(s) will have fixed payments for at least the first 4 years?

Fixed rate only
Fixed rate and balloon only
Fixed rate and adjustable rate only
Fixed rate, adjustable rate, and balloon

Answer 1

The mortgage that will have fixed payments for at least the first 6 years is A. Fixed rate and adjustable rate only

Answer 2

It wouldn't make sense for it to be D seeing as you don't usually have all three.

Answer 3

C doesn't seem possible because if it's a fixed rate, how can it also be adjustable?

Answer 4

B is more likely but doesn't work for this one.

Answer 5

alright :)