Imagine you make the same mistakes in life that I made and find yourself about to start a PhD program. You will be spending the next 5 years of your life in one place, then moving to wherever will take you. You find a $150,000 house that you want to buy and get preapproved for an 8% APR, fully amortizing 30-year mortgage. In addition to your $35,000 down payment, the bank requires you to pay 2 points up front.

• Assuming you will sell the house when you finish the program, what will your effective annual rate, i.e. the actual APY, be?