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You are about to take a mortgage and you plan to hold it for 15 years. A lender offers you a 30-year fixed-rate mortgage of $225,000 at a contract rate of 6.50% with two discount points. Another lender offers you a 15-year fixed-rate mortgage of $225,000 at a contract rate of 5.75%. A. What is the effective cost of the 30-year loan over the fifteen-year holding period? Answer: B. What amount of discount points on the 15-year loan will equalize the effective costs of these loans over the fifteen-year holding period? Answer: You are about to take a mortgage and you plan to hold it for 15 years. A lender offers you a 30-year fixed-rate mortgage of $225,000 at a contract rate of 6.50% with two discount points. Another lender offers you a 15-year fixed-rate mortgage of $225,000 at a contract rate of 5.75%. A. What is the effective cost of the 30-year loan over the fifteen-year holding period? Answer: B. What amount of discount points on the 15-year loan will equalize the effective costs of these loans over the fifteen-year holding period? Answer:
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A To calculate the effective cost of the 30year loan over the fifteenyear holding period we need to ... View the full answer
Related Book For
Understanding Business Statistics
ISBN: 978-1118145258
1st edition
Authors: Stacey Jones, Tim Bergquist, Ned Freed
Posted Date:
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