MORTGAGE - EVALUATE TWO OPTIONS Follow the directions and complete each section as stated. You will upload the completed problem to Blackboard. You have decided to purchase a home. The loan amount is $210,000 Option 1: The terms of the loan are as follows: 30-year, 4.0% fixed rate with closing costs of $4040.00 Option 2: The terms of the loan are as follows: 30-year, 3.5% fixed rate with closing costs of $4040.00 plus 2 points Step 1: Calculate your monthly payment for both options using the Loan Payment formula. Show how you substitute the values in the formula. APR PMT = Step 2: How much would you save per month by choosing the option with the lower monthly payment? Step 3: Figure the total closing costs for option 2. How much more did you pay in closing costs to receive the lower interest rate? (Each point cost 1% of the loan amount) Step 4: To figure how long it will take to recoup the extra costs, divide the extra cost by the savings per month. Convert your answer in terms of years and months. Step 5: Discuss the pros and cons of the two options. Step 6: What if there was a third option of a 15-year, 3.3% fixed rate with closing costs of $4040.00? Discuss the pros and cons of choosing this option