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Without buying points, a monthly mortgage payment will be $1,250. buying 1 point at closing would reduce the payment to $1,236. to the nearest year, how long would it take to break even by buying 1 point, with a $100,000 mortgage? a. 5 years b. 6 years c. 7 years d. 8 years

Respuesta :

Without buying points, the time that will be taken to break even will be 6 years.

How to calculate break-even?

The monthly mortgage payment will be $1,250. Buying 1 point at closing would reduce the payment to $1,236.

1 point= $1000

The time taken will be:

Monthly savings = 4250/1236 = 14

Time taken = 7

1000/14 = 71.4 months

71.4/12=5.95 years = ~6 years

Thus, The time that will be taken to break even will be 6 years.

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