Question

In which of the following cases would you most likely buy a point when closing on a home loan?

a. The monthly payment is reduced by $8 and you plan to sell the home at the end of 3 years.
b. The monthly payment is reduced by $10 and you plan to sell the home at the end of 4 years.
C. The monthly payment is reduced by $12 and you plan to sell the home at the end of 5 years.
d. The monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.
Please select the best answer from the choices provided
COA
OB
OC

Answer 1

Buy points when monthly payment is significantly reduced and you plan to hold the home for a longer period.

Step-by-step explanation:

In this case, you would most likely buy a point when closing on a home loan if the monthly payment is reduced by a significant amount and you plan to hold the home for a longer period of time. The longer you plan to stay in the home, the more time you have to recoup the cost of buying the points. Therefore, option d is the most likely case to consider buying a point as the monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.

Learn more about Buying points while closing on a home loan