Question

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

Answer 1

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