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Question

Determine the cost of the points and the new interest rate for each loan amount and interest rate. Assume each point costs 1% of the loan amount. $550,000, original APR 4.75%, 1 point with a 0.3% discount.

Solution

VerifiedAnswered 2 years ago

Answered 2 years ago

Step 1

1 of 5In this task, we have to determine the cost of the points and the new interest rate for each loan amount and interest rate. Let us first write what variables are given:

Loan amount $= \$550,000$

Interest rate $= 4.75\%$

Points purchased $= 1$

Reduction per point purchased $= 0.3\%$

Cost per point $= 1\%$

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