Question

A homeowner can obtain on property valued at $250,000, a 30-year fixed-rate mortgage, LTV=90%, at a rate of 6.0 percent with zero points or at a rate of 5.5 percent with 2.25 points. If she will keep the mortgage for 30 years, what is the net present value of paying the points (to the nearest dollar)?

Answer #1

step1:

find monthly payment of loan without points

let X be the monthly payment

X * [1-(1+6%/12)^-360]/6%/12 = 250,000

X = 1498.88

step2:

find monthly payment of loan with points

let y be the monthly payment

y * [1-(1+5.5%/12)^-360]/5.5%/12 = 250,000

y = 1419.47

difference between the monthly payments = 1498.88 - 1419.47 = 79.41

step3:

Net present value of points = Present value of sum of montly payment saved - value of points payed

= 79.41 * [1-(1+5.5%/12)^-360]/5.5%/12 - (0.025 * 250000)

= 7735.83

= $7736 .....ans

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. If you will keep the mortgage for 30
years, what is the net present value of paying the points (to the
nearest dollar)?
please show in excel

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
not invested?

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
invested monthly?

a homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
invested monthly?

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
not invested?
SHOW IN EXCEL PLEASE

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
not invested?
show in excel please

A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
invested monthly? please show work

show in excel plz
A homeowner can obtain a $250,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.25 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment saving is
invested monthly?

A homeowner can obtain a $350,000, 30-year fixed-rate mortgage
at a rate of 6.0 percent with zero points or at a rate of 5.5
percent with 2.5 points. How long must the owner stay in the house
to make it worthwhile to pay the points if the payment savings are
invested monthly?

You are considering the following options on a $250,000
mortgage:
1) A 15-year 3% fixed-rate; 0 points
2) A 15-year 2% fixed rate with 2 points
What is the net present value of paying the points if you plan
to keep the mortgage for the full 15 years? Use the 2% interest
rate to discount the monthly savings.
$13,287.24
$10,000
$0
$18,287.24

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