You want to buy a $190000 home. You plan to pay $19000 as a down payment, and take out a 15 year loan at 4.25% interest for the rest. a) What is the amount of the payment? $ b) If the bank charges 2 points on the loan, what is the amount charged

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.