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QUESTION
You plan to purchase a house for $115,000 using a 30-year mortgage from your local bank. You will make a down payment of 20% of the purchase price.
You plan to purchase a house for $115,000 using a 30-year mortgage from your local bank. You will make a down payment of 20% of the purchase price.
- Your bank offers you the following two options for payment:
- Option 1: Mortgage rate of 10.25% and 1 discount point.
Which option would you choose? [Hint: consider only the incremental costs and benefits of Option 2 with respect to Option 1]
- Your bank offers you the following two options for payment:
