You are considering a mortgage for 15 years with initial value $90,000, and annual interest rate 4.25%. You can reduce your interest rate by buying points. The bank will sel you a point for 1% of the initial value of the loan. Each point you buy reduces your interest rate by 0.30%. You are considering buying 3 points. If you buy these points, how long until your lower monthly payments pay back the cost for these points? ○ a) 51 months.
You are considering a mortgage for 15 years with initial value $90,000, and annual interest rate 4.25%. You can reduce your interest rate by buying points. The bank will sel you a point for 1% of the initial value of the loan. Each point you buy reduces your interest rate by 0.30%. You are considering buying 3 points. If you buy these points, how long until your lower monthly payments pay back the cost for these points? ○ a) 51 months.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Transcribed Image Text:You are considering a mortgage for 15 years with initial value $90, 000, and annual
interest rate 4.25%. You can reduce your interest rate by buying points. The bank will sell
you a point for 1% of the initial value of the loan. Each point you buy reduces your interest
rate by 0.30%. You are considering buying 3 points. If you buy these points, how long
until your lower monthly payments pay back the cost for these points?
a) 51 months.
b) 54 months.
c) 57 months.
d) 62 months.
e) 64 months.
f) 68 months.
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