Question
A borrower takes out a 30-year mortgage loan for $100,000 with an interest rate of 6% plus 4 points. Payments are to be made monthly.
A borrower takes out a 30-year mortgage loan for $100,000 with an interest rate of 6% plus 4 points. Payments are to be made monthly.
a. What is the effective cost of borrowing on the loan if the loan is carried for all 30 years?
b. What is the effective cost of borrowing on the loan if the loan is repaid after 10 years?
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Strategies For Monetary Policy
Authors: John H. Cochrane, John B. Taylor
1st Edition
0817923748, 978-0817923747
