1. A lender gives you a choice between the following two 30-year mortgages of $200,000:
Mortgage A: 6.65% interest compounded monthly, with one point, monthly payment of $1283.93
Mortgage B: 6.8% interest compounded monthly, with no points, monthly payment of $1303.85
Assuming that you can invest money at 4.8% interest compounded monthly, determine the length of time that you must retain the mortgage in order for mortgage A to be the better choice?
2. A lender gives you a choice between the following two 30-year mortgages of $235,000: Mortgage A: 6.9% interest compounded monthly, with one point, monthly payment of $1547.71
Mortgage B: 6.5% interest compounded monthly, with three points, monthly payment of $1,485.36
Assuming that you can invest money at 3.3% interest compounded monthly, determine the length of time that you must retain the mortgage in order for mortgage B to be the better choice?