Question:

A potential homebuyer is applying for a $100,000 mortgage.?

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The buyer can get a $600 monthly payment by paying no points, or a $520 payment by paying 2 points. How many months will it take to recover the points if the lower mothly payment is chosen?

a. 25

b. 24

c. 15

d. 13

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3 ANSWERS


  1. a.    Points cost $2,000.     She saves $80 a month.  Divide 2,000 by 80. /


  2. This has to be an academic question because it does not take into account the lost value of the money invested up front.  Just math makes it 25 months but the reality is that it takes longer because you were not able to use that money and lost whatever interest or use that you could have earned.

  3. another homework question? egads!!

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