Question: In the previous problem, suppose that you believe that you will only live in the house for eight years before selling the house and buying

In the previous problem, suppose that you believe that you will only live in the house for eight years before selling the house and buying another house. This means that in eight years, you will pay off the remaining balance of the original mortgage. What is the maximum number of points that you would be willing to pay now?

In Previous Problem,

You are buying a house and will borrow $200,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4 percent. Alternatively, she tells you that you can "buy down" the interest rate to 3.75 percent if you pay points up front on the loan.

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