FinancingInterest_and_payment_calculationsHARD
On a $288,000 mortgage, Jordan pays 1 discount point to reduce the rate. The point costs $2,880 and lowers the payment by $36 per month. About how many months must Jordan keep the loan to break even on the point cost?
Correct Answer
A) 80 months
Step 1: Break-even months = Upfront point cost ÷ Monthly savings. Step 2: $2,880 ÷ $36 = 80 months. Jordan must keep the loan about 80 months for the accumulated monthly savings to equal the upfront cost of the point.
Answer Options
A
80 monthsB
72 monthsC
60 monthsD
96 monthsWhy This Is the Correct Answer
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Related Topics & Key Terms
Key Terms:
discount_pointsbreak_even_analysismonthly_savingsmortgage_strategy
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