Suppose you are shopping for a mortgage and the lender presents you with a long menu of loan options. For each option, there is a discount point charged and an interest rate given. The amount of the point ranges anywhere from -1% to 3%. When would it be optimal for you select a loan with a point of 2%? (Assume there is no affordability constraint, ie: you have the money to buy whatever point you would like).

Group of answer choices

Only when the point is equal to the effective borrowing cost

Never

If you have a very short holding period

If you have a very long holding period

Always