Leah is financing $340,000 to purchase a house. How much money will she save over the life of a
30-year, fixed-rate loan by buying 3 points with a rate of 6.475% instead of not buying points with a rate of 6.85%?

Question

Leah is financing $340,000 to purchase a house. How much money will she save over the life of a 
30-year, fixed-rate loan by buying 3 points with a rate of 6.475% instead of not buying points with a rate of 6.85%?

anonymous · Answer

i dont get this stuff at all and my teacher wont answer my call

anonymous · Answer

someone help me

primeralph · Answer

What's the points about?

whpalmer4 · Answer

points are an upfront payment of a fraction of the value of the loan.  so by buying 3 points, she forks over 0.03*$340,000 and in exchange gets to borrow $340,000 at 6.475% instead of 6.85%

whpalmer4 · Answer

with a 30 year loan you pay a lot of interest, so it may well be worth it.  it's certainly worth doing the math!

primeralph · Answer

ohhh.......

whpalmer4 · Answer

@maddiissoflyyyy do you know how to figure out what 3 points on $340,000 is?

whpalmer4 · Answer

Find the total payments made on the mortgage at 6.475%.  Find the total payments made on the mortgage made at 6.85%.  Find out the value of 3 points (hint: percentage points) on $340,000.  The amount she saves is the larger total payments - smaller total payments - the points.