Question

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?

Answer 1

Solution:-

N = 30 years * 12 = 360

Loan Amount = $2,50,000

Rate for Loan A =

Rate for Loan A = 0.50%

Rate for Loan B =

Rate for Loan B = 0.4583%

Payment for Loan A -

Payment for Loan B -

Savings = PMT of Loan A - PMT of Loan B

Savings = $1,498.88 - $1,419.47

Savings = $79.40

Points = $2,50,000 * 0.025 = $5,625

Break Even Point =

Break Even Point =

Break Even Point = 5.90 years

If you have any query related to question then feel free to ask me in a comment.Thanks.