Top Posters
Since Sunday
5
a
5
k
5
c
5
B
5
l
5
C
4
s
4
a
4
t
4
i
4
r
4
Home Q & A Board Other Fields Homework Help Business Finance
New Topic  
Memphic Memphic
wrote...
Go to Answer
Posts: 728
Rep: 0 0
6 years ago
You are purchasing a new home and need to borrow $325,000 from a mortgage lender.  The mortgage lender quotes you a rate of 6. 5% APR for a 30-year fixed rate mortgage (with payments made at the end of each month).  The mortgage lender also tells you that if you are willing to pay 1 point, they can offer you a lower rate of 6.25% APR for a 30-year fixed rate mortgage.  One point is equal to 1% of the loan value.  So if you take the lower rate and pay the points, you will need to borrow an additional $3250 to cover points you are paying the lender. Assuming that you do not intend to prepay your mortgage (pay off your mortgage early), are you better off paying the 1 point and borrowing at 6.25% APR or just taking out the loan at 6.5% without any points?
Textbook 
Corporate Finance: The Core

Corporate Finance: The Core


Edition: 4th
Authors:
Read 78 times
1 Reply
Replies
Answer verified by a subject expert
EgorGruzdevEgorGruzdev
wrote...
#1
Posts: 422
Rep: 16 0
6 years ago
Sign in or Sign up in seconds to unlock everything for free
More solutions for this book are available here
1

Related Topics

Memphic Author
wrote...

6 years ago
Smart ... Thanks!
DAGINC
wrote...

Yesterday
Brilliant ツ
Lawson1981
wrote...

2 hours ago
You make an excellent tutor!
New Topic      
Quick Reply
Explore
Post your homework questions and get free online help from our incredible volunteers
  1259 People Browsing
Start New Topic Take the Tour CoursesNew Study Tools Topics Trending Browse by Textbook
Live Chat
Related Images
  
 430
  
 4430
  
 316
Your Opinion
Which is the best fuel for late night cramming?
Votes: 145
Previous poll results: What's your favorite funny biology word?