Problem 6.65 – Mortgage Points, Buy Down, Sell House Early
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Determine the maximum number of points you would be willing to pay up front to buy down the interest rate on a 30-year fixed-rate mortgage with a specific loan amount and monthly payments, considering that you plan to live in the house for a certain number of years before selling it and paying off the remaining balance. Compare the mortgage options with their respective annual percentage rates, keeping in mind that a point on a loan is 1 percent of the loan value.
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