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Suppose you take a fixed-rate mortgage for $250,000 at 5.25% for 30 years, monthly payments with one discount point. At the end of five years,
Suppose you take a fixed-rate mortgage for $250,000 at 5.25% for 30 years, monthly payments with one discount point. At the end of five years, you receive a job transfer and you sell the house and repay the mortgage. You discover that there is a 4 percent prepayment penalty on this loan for the first eight years of life. What is the effective cost of this loan?
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