On Bankrate.com, McGlone Mortgage Group and Homefinity are offering thirty-year mortgage financing with the following APR's based
Question:
On Bankrate.com, McGlone Mortgage Group and Homefinity are offering thirty-year mortgage financing with the following APR's based on monthly payments: 2.76% (McGlone) and 2.88% (Homefinity). The major difference is in the amount of upfront costs (points, origination fees, etc.) associated with each loan. McGlone's upfront costs are 2.5% of the loan amount, while Homefinity charges only 1.6% of the loan amount.
You are currently seeking a $200,000 loan to purchase a home and are considering these two lenders.
Required:
1. Determine the monthly payment required by each lender:
- Homefinity
- McGlone
2. Determine the Effective Annual Rate (EAR) that you would pay based upon the net amount (loan amount less upfront costs) that you received at the loan's closing and the payment (part 1) over the thirty-year life of the loan.
- McGlone
- Homefinity
Expert Answer:
1 Determine the monthly payment required by each lender Homefinity 76414 McGlone 76923 2 Determin... View the full answer
