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a) Two mortgage options are available: a 30-year fixed rate loan at 6% with no discount points, and a 30-year fixed-rate loan at 5.75% with

a) Two mortgage options are available: a 30-year fixed rate loan at 6% with no discount points, and a 30-year fixed-rate loan at 5.75% with 1 discount point. Assuming you will not pay off the loan early, which alternative is best for you? Assume a $100,000 mortgage.

b) Assuming you may pay off the loan early, how long do you have to stay in the house for the mortgage with points to be a better option?

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