Suppose with this loan we had closing costs of $3400 plus 2 points. Use this to answer the following questions. Loan in $600,000 

1) What are the calculation of the additional closing costs associated with 2 points of your mortgage as stated in the above scenario?

2). What is the total amount paid for closing costs?

Suppose you would like to refinance your home and BANK A offers you a 3% loan for 30 years, and you have to pay closing costs of $2000 plus 1 point. Suppose BANK B offers you a loan at 3.25% for 30 years with $0 closing costs. 

3) Which offer would you choose, and why? Describe a specific scenario where you would choose Bank A? Bank B? 

4) You are purchasing your first home and your lender quotes you at an interest rate of 4.25% for your home. When you go in to sign your paperwork for the loan the following day they say "interest rates have gone up slightly to 4.75%. This isn't that big of a deal because you will only be paying about $20 extra dollars a month. You can afford that right?" How would you respond?

Answer rating: 100% (QA)

Lets address each question step by step 1 Calculation of Additional Closing Costs for 2 Points Point... View the full answer