You go to a car dealership and you see a car for $15,000. You need a car loan and the dealership tells you they can get you a loan through a finance company. They tell you it will cost
$446 per month at 4.5% per year. You tell them, you can only afford up to $300 per month.
They tell you, they can get it done. Instead of a three year loan, they get you a 5 year loan at
6%. You think perfect! I can afford it, but how much more do you pay in 5 years vs. 3 years?

In a fixed-term, level-payment reverse mortgage, sometimes called a reverse annuity mortgage, or ram, a lender agrees to pay the homeowner a monthly payment, or annuity, and expects to be repaid from the homeowner’s equity when he or she sells the home or obtains other financing to pay off the ram. consider a household that owns a $150,000 home free and clear of mortgage debt. the ram lender agrees to a $100,000 ram for 10 years at 6 percent. assume payments are made annually, at the beginning of each year to the homeowner. calculate the annual payment on the ram.