You are taking out a fully amortizing loan for $200,00 over 30 years. You can choose between a loan at 5% with 3 points and a loan at 5.25% with 1 point. If you plan to stay in the home for 7 years, calculated what is the amount of loan will give you the lower effective borrowing cost?

Answer rating: 100% (QA)

1 point reduces the interest rate by 025 So for Option 1 your effective interest rate ... View the full answer