Laurie is financing $360,000 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 6.275% instead of not buying points with a rate of 6.65%?

$31,906.80

$21,106.80

$13,990.68

$3,190.68

Question

Laurie is financing $360,000 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 6.275% instead of not buying points with a rate of 6.65%?

 $31,906.80

 $21,106.80

 $13,990.68

 $3,190.68

tkhunny · Answer

Please explain the concept of "Buying Points".  Exactly what does it do to the interest rate and the amount financed.  And, how much does it cost to do that?