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
OA
OB
C
OD

Answer 1

The case with the highest monthly payment reduction and the longest time frame for selling the home would likely be the best choice to buy points when closing on a home loan.

Step-by-step explanation:

To determine which case it would make the most sense to buy points when closing on a home loan, we need to consider the amount of money saved in monthly payments and the length of time you plan to own the home. In this case, the monthly payment reduction and the time frame for selling the home are given as follows:

1. a. The monthly payment is reduced by $8 and you plan to sell the home at the end of 3 years.
2. b. The monthly payment is reduced by $10 and you plan to sell the home at the end of 4 years.
3. c. The monthly payment is reduced by $12 and you plan to sell the home at the end of 5 years.
4. d. The monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.

The case with the highest monthly payment reduction is option d, where the monthly payment is reduced by $14. If you plan to sell the home at the end of 7 years, buying points in this case would likely result in the greatest overall savings.

Learn more about buying points when closing on a home loan