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 Assumption 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 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.

4. Variables Involved Current fix interest rates on home loans Current adjustable interest rates on home Inflation Down-Payment Income Credit History

5. 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.

6. 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.

7. Analysis Found present worth of payments made (all loans used $1,755 for monthly payment) Analyzed present worth of tax benefits from interest paid. Combined tax benefits with payments to find the best option

8. Analysis

11. Conclusion If interest is low (i.e.. 2% or 3%) use 3yr adjustable Large tax break due to all the interest paid If interest is high or medium use 30year fixed

12. Resources BankofAmerica.com Loanentry.net Loansearch.us