Leah is financing $340,000 to purchase a house. How much money will she save over the life of a 30-year, fixed-rate loan by buying 3 points with a rate of 6.475% instead of not buying points with a rate of 6.85%?

$30,398.40

$3,039.84

$13,239.84

$20,198.40

Question

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Respuesta :

DeniceSandidge DeniceSandidge · Answer 1 · 2020-04-03T07:18:44+02:00

Answer:

save money = $20198.40

Explanation:

given data

financing amount = $340,000

time period = 30 year

rate with 3 point = 6.475%

rate without point = 6.85%

solution

first we get here monthly payment at 6.475% that is in excel we get

monthly payment = PMT(6.475%/12, 30×12, -340000)

monthly payment = $2143.44

so here pay total interest will be

total interest = $2143.44 ×(30×12) -340000 + (340000 ×3%)

total interest = $441838.40

and

monthly payment at 6.85% that is in excel we get

monthly payment = PMT(6.85%/12, 30×12, -340000)

monthly payment = $2227.88

so here pay total interest will be

total interest = $2227.88 ×(30×12) -340000

total interest = $462036.80

so here money save over this loan amount is

save money = $462036.80 - $441838.40

save money = $20198.40