Jack and Diane are considering purchasing a new home. They have identified a suitable option, a two bedroom townhouse that will cost $212,400 to purchase. They are now trying to select the best method of financing and have identified a couple of suitable options. As their most trusted friend, they have asked for your help in selecting the best option for their needs. They plan to live in this townhouse for only 10 years, after which they anticipate needing a larger home, with a backyard, to accommodate their growing family Option A: Conventional 30 year mortgage with an interest rate of 4.375% APR with monthly payments. If Jack and Diane choose this option they would need to make a 20% down payment and would owe an additional $5250 in closing costs and fees. They will make the down payment from their savings, however the lender will allow them to include the closing costs and fees in the loan finance amount (i. e. the amount borrowed) Option B: A special 25 year mortgage with an interest rate of 4.76% compounded monthly with monthly payments. This loan begins with a 5 year period in which Jack and Diane would only pay interest on the loan. If they choose this option they will make an 18% down payment and would owe an additional $4750 in closing costs and fees. Once again closing costs and fees can be included into the loan amount. After the interest only period is over, Jack and Diane's monthly payment would be applied to principal and interest. Option C: A special 15 year fixed rate mortgage, with bi-m payments (i. e. every 2 weeks or two times per month). The loan's interest rate of 3.94% compounded monthly. Because of the short term (ie, length) of this loan the bank will only require a 10% down payment, which will be paid from their savings. Jack and Diane would owe an additional $3200 in closing costs and fees, which can once again be included in the loan finance amount. a) 2 points] Determine the monthly payments that Jack and Diane will make for each b) 3 points] How much will Jack and Diane still owe i. e. what would the remaining c) 3 points] Which of these option should Jack and Diane want to choose, if their period of each loan in the first ten years of ownership. balance be) at the end of the 10th year for each loan? objective is to pay the least for their home over the first ten years of purchase. Support your decision by comparing the total interest paid over this period of time 14 points] Jack and Diane's have received one more offer for a home mortgage. This option - Option C, is described below. The purchase cost ($212,400) of the condo will remain the same and the time they expect to remain in the home (10 years) remain the same. Details of this new loan option are described below. 2. Option D: A 30 year adjustable rate mortgage (ARM) in which the initial interest rate of 4.25% APR for the first three years of the loan. After this initial fixed rate period the interest rate will change as described below. This option will require a 22% down payment, which will again be paid from their savings. The $5500 in closing costs and fees can once again be included in the loan finance amount. Payments will once again be made on a monthly basis. 10 i (APR) | 4.25% | 4.25% | 4.25% | 4.75% | 4.75% | 4.89% | 4.89% | 5.10% | 5.10% | 5.10% a) 3 points] Find the monthly payment for each of the 10 years of this adjustable rate mortgage. b) 1 points] Is this a better choice for Jack and Diane, relative to Options A, B, and C outlined in Question 1? Once again, support your choice by calculating the total interest paid over the first ten years of scenario.