You Need a Loan of $100,000 to Buy a Condo $4.25 \%$

question 81

Multiple Choice

You need a loan of $100,000 to buy a condo. Calculate your monthly payments and total closing costs for each choice.
-Choice 1: 30 -year fixed rate at $4.25 \%$ with closing costs of $\$ 1137$ and 1 points Choice 2: 20-year fixed rate at $3.75 \%$ with closing costs of $\$ 1137$ and 3 points

• A) Choice 1: \(\$ 491.94 ; \$ 2137\)
• Choice 2: \$592.89; \$4137
• B) Choice 1: \(\$ 497.36\); \$2137
• Choice 2: \(\$ 602.49\); \(\$ 4137\)
• C) Choice 1: \(\$ 481.74 ; \$ 2137\)
• Choice 2: \$542.26; \$1137
• D) Choice 1: \(\$ 501.43 ; \$ 2937\)
• Choice 2: \(\$ 463.16\); \(\$ 4937\)

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Definitions:

Real Income

Income adjusted for inflation, reflecting the actual purchasing power of money received.

Consumer Price Index

The Consumer Price Index (CPI) measures changes in the price level of a market basket of consumer goods and services purchased by households.

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Base Year

The base year is a specific year against which economic or financial indices are measured, allowing for comparison across different periods by setting a standard reference point.