You wish to get a mortgage for $360,000. Your mortgage lender offers you a choice of two...

You wish to get a mortgage for $360,000. Your mortgage lender offers you a choice of two 15-year fixed-rate mortgages with monthly payments. Neither mortgage has a pre-payment penalty. Mortgage A has 0 points and the rate is 3.625%. Mortgage Bhas 0.727 points and the rate is 3.375%. You expect to pre-pay your mortgage after 5 years of payments. Which mortgage, A or B, offers the higher expected yield to the lender?

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jeff jeffy answered 2 years ago

Your local lender offers you a fixed-rate mortgage with the following terms: $220,000 at 5.50% for...

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