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#1 Your local lender offers you a fixed-rate mortgage with the following terms: $250,000 at 5.25% for 30 years, monthly payments. The lender will charge
#1 Your local lender offers you a fixed-rate mortgage with the following terms: $250,000 at 5.25% for 30 years, monthly payments. The lender will charge you two discount points and the loan has a 4% prepayment penalty for the first 8 years of life.
A.What is the annual percentage rate (APR) of the loan?
B. What is the effective cost if you prepay the loan at the end of year five?
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