Cannon took out a mortgage for $85,290 on his new house. If the interest rate is 8.5 percent and the loan is for 25 years, how much will he pay monthly if he must pay 8.5 points per $1,000?

Question

amistre64 · Answer

what does it mean to pay 8.5 points?

amistre64 · Answer

maybe theres a table or chart involved with your study material?

tkhunny · Answer

Points have nothing to do with monthly payments unless they buy you a lower interest rate.  By the way, if you are contemplating paying 8.5 points for a mortgage, you should head for the door and run, screaming!

Are you paying 8.5 points monthly on the previously calculated monthly payment?  I've never heard of that, but I'm thinking your loanshark is getting a pretty good deal.

anonymous · Answer

there isn't a chart or a table and I don't know what they mean by 8.5 points. @tkhunny  @amistre64

amistre64 · Answer

i know how to calculate a fixed mortgage with the interest and term length .... but i got no idea what that 8.5 points per 1000 is spose to do.  Without knowing if its useless extra information or not, i cant really determine a suitable solution process

tkhunny · Answer

My official "simplest" or 'most common" understanding would be to ignore it.

I might also solve it by adding 8.5% to the original loan.

I might also solve it by using the points as the down payment, making the loan smaller.

I'm with @amistre64 , though.  We really need more information.

anonymous · Answer

I gave all the information I was given but thanks anyway. @amistre64 @tkhunny

amistre64 · Answer

the information presupposes that you understand the jargon employed by the question.  The mathing involved is just the result of knowing what its talking about to begin with :)  good luck tho