Use the Information for the Question(s)below

question 49

Multiple Choice

Use the information for the question(s) below.
You are purchasing a new home and need to borrow $250 000 from a mortgage lender. The mortgage lender quotes you a rate of 6.25% APR for a 30-year fixed rate mortgage. The mortgage lender also tells you that if you are willing to pay two points, they can offer you a lower rate of 6.0% APR for a 30-year fixed rate mortgage. One point is equal to 1% of the loan value. So if you take the lower rate and pay the points, you will need to borrow an additional $5 000 to cover points you are paying the lender.
-Assuming you do not pay the points and borrow from the mortgage lender at 6.25%, then your monthly mortgage payment (with payments made at the end of the month) will be closest to:

• A)$1 540
• B)$1 500
• C)$1 570
• D)$1 530