You are buying a house and the mortgage company offers to let you pay a"point" to reduce your APR from 5.62 % to 5.37 % on your $425,000, 30-year mortgage with monthly payments. If you plan to be in the house for at least fiveyears, should you doit?

The monthly mortgage payment at 5.62 % APR is $

The monthly mortgage payment at 5.37 % APR is $

The lower interest rate on the mortgage results in monthly savings of $

The PV of the monthly savings is $

The balance of the mortgage at the end of five years at 5.62 % APR is $

The balance of the mortgage at the end of five years at 5.37 % APR is $

The principal reduction due to the lower interest rate is $

The PV of the principal reduction is $

The net benefit or cost is $