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 A B C D

Answer 1

d. The monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.

Explanation:

Answer 2

d. The monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.

Explanation:

As we can see from the choices given that

In option A the monthly payment is declined by 8 and the sale of the home is done at the end of the 3 years

In option B monthly payment is declined by 10 and the sale of the home is done at the end of the 4 years

In option C monthly payment is declined by 12 and the sale of the home is done at the end of the 5 years

In option D monthly payment is declined by 14 and the sale of the home is done at the end of the 7 years

From the above choices, we can conclude that the declining percentage high in option D plus the time period is also high

Therefore the option D is chosen