Given:
home loan - 150,000
term - 20 years
a point is 1% of the loan.
150,000 * 1% = 1,500
monthly payment with no point 1,160
monthly payment with a point is 1,150
When Mr. and Mrs. Zeller chose not to buy a point, this means that they have the ability to pay the home loan at a given rate for 20 years. They have the capability to pay the monthly amortization. They also can pay off the loan before the 20 year term is up.
Buying a point means that the monthly amortization will be lower as well as the interest rate.
