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Group 5

Group 5. Tony Duong - Organizer Paul Sibbett - Techie Behrooz Falsafi - Summarizer. Fixed Vs. Adjustable Home Loans. Which plan best fits a engineer with a job? Which plan has a better monetary value in the long-run (retirement)? How does each type of loan work?

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Group 5

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  1. Group 5 Tony Duong - Organizer Paul Sibbett - Techie Behrooz Falsafi - Summarizer

  2. Fixed Vs. Adjustable Home Loans • Which plan best fits a engineer with a job? • Which plan has a better monetary value in the long-run (retirement)? • How does each type of loan work? • Which one fits your salary the best?

  3. Scenario • A engineer with a bachelor’s degree has been working for 2 years, and wants to buy a house, but is unsure of which type of available loan fits him best.

  4. Assumption • The house is in the range of about $300,000. • The person has saved up approximately $15,000. • They are currently making about $55,000 with a 5% raise each year.

  5. Variables Involved • Current fix interest rates on home loans • Current adjustable interest rates on home • Inflation • Longevity of the loan (15,20, or 30 years?) • Down-Payment • Income • Credit History

  6. Fixed loans for a 30 year plan • First 23 years, more interest is paid off than principal. • Larger tax deductions. • Inflation increase, mortgage payments become a smaller part of overall expenses.

  7. Adjustable loans for a 30 year plan • Interest rate remains the same for a fixed period • The rate rise at fixed interval. (.05 to 2 percent) Advantage: • The option of refinance when fixed rates get better. • Lower initial interest rate than a fixed mortgage. • Qualify for a larger loan.

  8. Resources • Loanentry.net • Loansearch.us

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