Question

Did I solve right? :)

Answer 1

Ken and Kim have obtained a 30-year, fixed rate mortgage for $625,250 with a 7.05% interest rate. They purchased 3 points and their rate is now 6.775%. Factoring in the cost of points, when is the break-even point on their mortgage?

4 years, 6 months

13 years, 7 months

12 years, 6 months

6 years, 0 months


I got 13.58 which I am guessing is 13 years and 7 months

Answer 2

Monthly payment os 7.05 = 418.82

Monthly Payment of 6.775 = 4065.80

Subtract those 2 and I got 115.02

Answer 3

Cost of points = 625,250* 0.03=18757.50

18757.50/163.08 = 163.08

163.08/12 = 13.59