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What would be the total interest paid on each loan

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Reference no: EM133177640

Question - Luis Schamhach is shopping for a 15-year mortgage for $150,000. Currently, the Fortune Bank is offering an 8.5% mortgage with 4 discount points; the Northern Trust Bank is offering an 8.75% mortgage with no points. Luis is unsure which mortgage is a better deal and has asked you to help him decide. (Remember, each discount point is equal to 1% of the amount financed.)

Required -

a. What would be the total interest paid on each loan?

b. Taking into account the closing points, which bank is offering a better deal and by how much?

Reference no: EM133177640

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