Question

Karen is deciding between two loans
Loan A Loan B
$257,000
30-year fixed
6.25%
0 discount points
M=$1582.39 $257,000
30-year fixed
5.95%
2 discount points
M=$1532.59


Karen has calculated all of the associated fees as well as any other expenses. She has $5,500 available to purchase the points, and plans to stay in the house for half the length of the loan.

Which statement represents the best financial decision?
Karen should purchase the discount points because she will be in the house long enough to justify the purchase.

Answer 1

choices:
Karen should purchase the discount points because she will be in the house long enough to justify the purchase.

Karen should purchase the discount points because doing so lowers her interest rate.

Karen should not purchase the discount points because she does not have enough available cash.

Karen should not purchase the discount points because she will not be in the house long enough to justify the purchase.