Problem 12. (a) Suppose you had to choose between a 11% 30-year mortgage or a 10.5%...

Problem 12. (a) Suppose you had to choose between a 11% 30-year mortgage or a 10.5% mortgage with 2 discount points. Which should you choose? Assume you wished to borrow $100,000.

(b) What are the discount points, and why do some mortgage borrowers pay them?

Expert Solution

jeff jeffy answered 2 years ago

(a) Suppose you had to choose between a 11% 30-year mortgage or an 10.5% mortgage with...

(a) Suppose you had to choose between a 11% 30-year mortgage or an 10.5% mortgage with 2 discount points. Which should you choose? Assume you wished to borrow $100,000. (b) What are the discount points, and why do some mortgage borrowers to pay them?

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