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Question 3 5 pts You are borrowing $250,000 to buy a house, using a standard, 30-year mortgage. Your mortgage lender offers a 5.50% mortgage with
Question 3 5 pts You are borrowing $250,000 to buy a house, using a standard, 30-year mortgage. Your mortgage lender offers a 5.50% mortgage with no points, or a 5.20% mortgage with X points. You plan on living in the house for exactly 9 months, paying only the required payment each month, and without refinancing your mortgage. What points will make you indifferent between the two mortgages? Use the 5.50% rate to discount cash flows between the two options, Note: all rates in the problem are nominal annual rates with monthly compounding Recall, 1 point is 1% of the mortgage. Carry your answer to 2 decimal places. For example, if your answer is 1.255 points, answer "1.26
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