Another issue to research when purchasing a home is that of points and mortgage interest rates. Usually paying higher points results in a lower mortgage interest rate. The question for the homebuyer is: Should I pay higher points for a lower mortgage interest rate, or pay lower points for a higher mortgage interest rate? The answer to that question depends on many factors, one of which is the amount of time the homeowner plans on staying in the home. Consider two typical situations for a 30-year, $100,000 mortgage. Option 1 offers an annual mortgage interest rate of 8.25% and a loan origination fee of 3.5 points. Option 2 offers an annual interest rate of 8% and a loan origination fee of 4points. What is the total amount paid, including points, after 3 years for each option? ( Round your answers to the nearesr cent.) Option 1: Option 2:
Another issue to research when purchasing a
home is that of points and mortgage interest
rates. Usually paying higher points results in a
lower mortgage interest rate. The question for
the homebuyer is: Should I pay higher points for
a lower mortgage interest rate, or pay lower
points for a higher mortgage interest rate? The
answer to that question depends on many
factors, one of which is the amount of time the
homeowner plans on staying in the home.
Consider two typical situations for a 30-year,
$100,000 mortgage. Option 1 offers an annual
mortgage interest rate of 8.25% and a loan
origination fee of 3.5 points. Option 2 offers an
annual interest rate of 8% and a loan origination
fee of 4points.
What is the total amount paid, including points, after 3 years for each option? ( Round your answers to the nearesr cent.)
Option 1:
Option 2:
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