Jim and Ester have saved $25,000 for a down payment on their first house which costs $100,000. The FHA loans for which they qualify requires them to put $10,000 down. A FHA mortgage will be 5.5%. A conventional 30-year mortgage will be 4.5% interest but requires 20% down payment.
- Which loan should they choose and why?
- What considerations must they make in deciding to buy versus rent?
- Use the facts found in the text to back your ideas and suggestions for Jim and Ester?