Question

Without buying points, a monthly mortgage payment will be $958. buying 1 point at closing would reduce the payment to $948.75. if each point costs $1000.00, rounded to the nearest year, how long would it take to break even by buying 1 point? a. 7 years b. 8 years c. 9 years d. 10 years please select the best answer from the choices provided a b c d

Answer 1

If  each point costs $1000.00. how long would it take to break even by buying is:9 years.

Time

First step

Monthly savings=$958-$948.75

Monthly savings=$9.25

Second step

Time=(Cost of points/Mothly savings)/ 12 months

Time=($1,000/$9.25)/12 months

Time=108/12 months

Time=9 years

Therefore how long would it take to break even by buying is:9 years.

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