Answer:
The answer is d. 127 months
Explanation:
Mortgage loan amount is the amount you wish to borrow for your home mortgage.
To calculate how many months would it take him to break-even on the points purchase you must:
-You know the amount of your monthly payment at the interest rate to be charged if Tyrone does not buy points: $ 846.18
-You know the amount of your monthly payment at the lowest rate if Tyrone pays points: $ 834.70
-Subtract the lower payment from the higher payment to find the amount saved each month: $846.18 - $834.7 = $11.48
- The cost of each point is equal to one percent of the loan amount. So, for a $145,000 loan, one discount point equals $1,450. Taking this into account, finally, you divide that amount charged for points at closing ($1,450) by the monthly amount saved. The result is the number of months you must keep the loan to break-even on paying points.
(approximately )
This means that 127 months would it take him to break-even on the points purchase