You are considering a thirty-year home loan of $400,000. A prospective lender has quoted an APR of 3.75% (compounded monthly) plus two points. A "point" is one percent of the loan's amount and is deducted from the loan proceeds. Thus, for a $100,000 loan, the lender would only give you $99,000 if the lender charged one point. However, your monthly payment would still be based on the entire $100,000 amount. 1. What would be the amount of your monthly payment on this loan? а. b. How much would the lender actually give you on this loan?
You are considering a thirty-year home loan of $400,000. A prospective lender has quoted an APR of 3.75% (compounded monthly) plus two points. A "point" is one percent of the loan's amount and is deducted from the loan proceeds. Thus, for a $100,000 loan, the lender would only give you $99,000 if the lender charged one point. However, your monthly payment would still be based on the entire $100,000 amount. 1. What would be the amount of your monthly payment on this loan? а. b. How much would the lender actually give you on this loan?
Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)
7th Edition
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Chapter7: Using Consumer Loans
Section: Chapter Questions
Problem 9FPE: Calculating and comparing add-on and simple interest loans. Eli Nelson is borrowing 10,000 for five...
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