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You and your lovely and/or handsome spouse have decided the purchase a new home with a...

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Finance

You and your lovely and/or handsome spouse have decided thepurchase a new home with a loan for $260,000. The mortgage youchose offers a contract rate of 4.5%, a maturity of 30 years, andrequires the payment of 3 points. What is the annual effective costof borrowing for this loan if you make your scheduled payments forthe full 30 years?

Answer & Explanation Solved by verified expert
3.8 Ratings (601 Votes)
Your lender has offered you a 260000 mortgage at 45 interest The lender charges 3 mortgage points or 3 discount points 1 discount point in this mortgage is 2600 1 of 260000 Hence 3 discount points is 3 x 2600 7800 Adding this to the loan amount gives us 267800 which at 45 interest would produce a monthly payment of 13569 We calculate the monthly payment    See Answer
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