QUESTION 1

Loan Option 1: 279,000; 5.3875%; 30 years with 1 point

Loan Option 2: $279,000; 5.875%; 30 years with no points

If you decide to take Loan Option 1 that offers the points, what is your principal balance after 7 years?

		$269,473.22
		$295,309.83
		$247,260.48
		$279,000

1 points

QUESTION 2

Loan Option 1: 279,000; 5.3875%; 30 years with 1 point

Loan Option 2: $279,000; 5.875%; 30 years with no points

If you decide to take Loan Option 1 that offers the points, and you have already calculated the principal loan balance after 7 years. Now you decide to refinance after (use the principal loan balance after 7 years) for a 30 year loan at 4.10% with $2,650 of closing costs. What is your new payment and how long will it take for you to break even from refinancing?

		monthly payment = $1,275.75 break even piont = 8.34 months
		monthly payment = $1,194.76 break even piont = 7.27 months
		monthly payment = $1,597.49 break even piont = 7.00 months
		monthly payment = $1,344.84 break even piont = 9.72 months

1 points

QUESTION 3

Loan Option 1: 279,000; 5.3875%; 30 years with 1 point

Loan Option 2: $279,000; 5.875%; 30 years with no points

Looking at these two loans, what is the total amount of interest paid for Loan Option 1?

		$296,492.33
		$279,000.00
		$284,216.40
		$563,216.40

1 points

QUESTION 4

If the most the bank will allow you to finance (the largest home loan you are able to obtain) is for $279,000; how big of a house can you buy if you put down 20%?

		$348,750
		$362,780
		$285,863
		$279,000

1 points

QUESTION 5

Loan Option 1: 279,000; 5.3875%; 30 years with 1 point

Loan Option 2: $279,000; 5.875%; 30 years with no points

1. Compare the two loans: (a) what are their monthly payments and (b) if you chose the loan with points, how long would it take for you to break even?

		loan 1 = $1,794.92 loan 2 = $1,650.39 break even points = 27.75 month
		loan 1 = $1,385.73 loan 2 = $1,279.47 break even points = 30.57months
		loan 1 = $1,564.49 loan 2 = $1,650.39 break even points = 35.19 months
		loan 1 = $1,797.49 loan 2 = $1,769.64 break even points = 39.26 months