Order the answer to: You are buying a house and will borrow $200,000 on

Order the answer to: You are buying a house…

Question	You are buying a house and will borrow $200,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4 percent. Alternatively, she tells you that you can “buy down” the interest rate to 3.75 percent if you pay points up front on the loan. A point on a loan is 1 percent (one percentage point) of the loan value. How many points, at most, would you be willing to pay to buy down the interest rate?
Subject	business-corporate-finance

Question

You are buying a house and will borrow $200,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4 percent. Alternatively, she tells you that you can “buy down” the interest rate to 3.75 percent if you pay points up front on the loan. A point on a loan is 1 percent (one percentage point) of the loan value. How many points, at most, would you be willing to pay to buy down the interest rate?

Subject

business-corporate-finance

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