Points you would be willing to pay to buy down interest rate

Assignment Help Financial Management

Reference no: EM131817180

You are buying a house and will borrow $175,000 on a 25-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.10 percent. Alternatively, she tells you that you can “buy down” the interest rate to 3.80 percent if you pay points upfront on the loan. A point on a loan is 1 percent (one percentage point) of the loan value.

What are the most points you would be willing to pay to buy down the interest rate? (Do not round intermediate calculations and round your answer to 3 decimal places, e.g., 32.164.)

Maximum points

Reference no: EM131817180

Questions Cloud

Opening savings account : Uriah Heep celebrated his 18th birthday by opening a savings account at the Thames River Bank and depositing $5,000. What was the amount of his?withdrawal?

What is the rate of return on your investment : At the beginning of the year, you invest $1,000 in a company's common stock. What is the rate of return on your investment?

What is the npv associated with the transaction : What is the NPV associated with the transaction?

In cell B2 compute the size of the payments : The dealer offers financing at 8.5% APR, with $2,500 cash down, and monthly payments for three years. In cell B2 compute the size of the payments.

Points you would be willing to pay to buy down interest rate : What are the most points you would be willing to pay to buy down the interest rate?

What rate would you actually be paying here : You are looking at a one-year loan of $17,000. The interest rate is quoted as 8.6 percent plus four points. What rate would you actually be paying here?

Break-even resale price-different between buying and leasing : What break-even resale price in two years would make you indifferent between buying and leasing? What is the present value of purchasing the car?

Liquidity-asset management-debt management-profitability : Choose one or two ratios from each of the groups: liquidity, asset management, debt management, profitability, and market value over three years for 2015,2016,

What is the value of this annuity five years from now : If the discount rate is 14 percent compounded monthly, what is the value of this annuity five years from now?

User Account

All Pages