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Todd Foley is applying for a $100,000 mortgage. He can get a $600 monthly payment for principal and interest and no points, or a $520 monthly payment with 2 points? How many months will it take Todd to cover the cost of the discount points if he takes the lower monthly payment?

User Hbejgel
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2 Answers

1 vote
Number of months
(0.02×100,000)÷(600−520)
=25 months
User Luong Ba Linh
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7 votes

Todd Foley is applying for a $100,000 mortgage.

As he gets 2 points, which means 2 % of 100000, this becomes:


(2)/(100)*100000= 2000

As Todd chooses the lower monthly payment of $520.

So, total money he will save each month =
600-520=80

Hence, the number of months Todd will need to cover the cost of the discount points =
(2000)/(80)=25 months

Hence, the answer is 25 months.

User Ayush Singhal
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7.8k points