Corporations and humans go through a similar decision-making process when buying assets. In this case, you are buying a house and your mortgage company/bank offers
Corporations and humans go through a similar decision-making process when buying assets.
In this case, you are buying a house and your mortgage company/bank offers to "let" you buy a "point" (1% of the loan amount) to reduce your APR from 6.5% to 6.25% on your $400,000, 30-year mortgage.
Explain when you would/should buy the point and when you would/should not buy the point for the three scenarios below if:
A) You plan to be in the house for less than 5 years?
B) You plan to be in the house for 5-15 years?
C) You plan on this being your "forever" home? This means you have the mortgage for the full 30 years.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Deciding whether to buy points on a mortgage is essentially a financial tradeoff between upfront costs and longterm savings on interest Points can hel...
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Step: 2
Step: 3
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Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
31st Edition
1111972516, 978-1285586618, 1285586611, 978-1285613109, 978-1111972516
