Answered step by step
Verified Expert Solution
Question
1 Approved Answer
1 1 . You are purchasing a new home and need to borrow $ 3 2 5 , 0 0 0 from a mortgage lender.
You are purchasing a new home and need to borrow $ from a mortgage lender. The mortgage lender quotes you a rate of APR for a year fixed rate mortgage with payments made at the end of each month The mortgage lender also tells you that if you are willing to pay point, they can offer you a lower rate of APR for a year fixed rate mortgage. One point is equal to of the loan value. So if you take the lower rate and pay the points you will need to borrow an additional $ to cover the point you are paying the lender.
Required: Assuming that you do not intend to prepay your mortgage pay off your mortgage early are you better off paying the point and borrowing at APR or just taking out the loan at without any points?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started