Home loans typically involve points, which are fees charged by the lender. Each point charged means that
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Home loans typically involve "points," which are fees charged by the lender. Each point charged means that the borrower must pay 1 % of the loan amount as a fee. For example, if the loan is for $100,000 and 2 points are charged, the loan repayment schedule is calculated on a $100,000 loan but the net amount the borrower receives is only $98,000. Assume the interest rate is 1% per month. What is the effective annual interest rate charged on such a loan, assuming loan repayment occurs over 360 months?
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The monthly payment is based on a 100...View the full answer
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Related Book For 
Fundamentals of Corporate Finance
ISBN: 978-0077861629
8th edition
Authors: Richard Brealey, Stewart Myers, Alan Marcus
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