About the mortgage lender

Assignment Help Financial Management

Reference no: EM131931091

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 the point you are paying the lender.

Required: 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?

Reference no: EM131931091

Questions Cloud

What courses in your educational program address : Research and find examples of how project teams are using new technologies for communication of project communications.

About the shares of common stock outstanding : Erna Corp. has 8 million shares of common stock outstanding. The tax rate is 35 percent. What is the company’s WACC?

What advantages did smitheford pharmaceuticals have : What advantages did Smitheford Pharmaceuticals have by owning manufacturing facilities in Canada prior to NAFTA?

State opinion on us congresses recent tax cuts : State your opinion on US congresses recent tax cuts, specifically Congress passed a bill to cut tax before 2018. Elaborate on your opinion and support

About the mortgage lender : You are purchasing a new home and need to borrow $325,000 from a mortgage lender.

Discuss various capital budgeting methods most often used : Let's discuss the various capital budgeting methods most often used. One simple one is the the payback period;

What is maryanne return from this transaction : On February 15th, the stock price rises to $32.31 per share and Maryanne exercises her option. What is Maryanne's return from this transaction?

Operations by investing in property-plant and equipment : Coca Cola's CEO is now looking to expand its operations by investing in new property, plant, and equipment.

Discuss the goals of the project to investigate marketing : The goal of this project is to allow you the opportunity to investigate a marketing topic of interest to you. This covers a wide range of options.

User Account

All Pages