Question
Your friend is looking to purchase a house. He has picked out the house, but will need to borrow $250,000 in order to complete the
Your friend is looking to purchase a house. He has picked out the house, but will need to borrow $250,000 in order to complete the purchase. He has asked you for help in navigating the different loan options. He wants to pay the loan off in 30 years, so he will choose the 30-year fixed rate loan from above. He is trying to decide if he should buy points.
What would his monthly payment be if he purchased three points?
If he buys the points (as described in c. above), what is the NPV? Assume that he stays in the house and keeps the loan for the entire 30 years..
What is the NPV if he only stays in the house for 4 years?
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Financial Markets And Institutions
Authors: Anthony Saunders, Marcia Cornett
4th Edition
0077262379, 978-0077262372
