SOLUTION: Kim Barnes bought a new home for 250,000. She made a 30% down payment and got a 4% 20 year loan. Amortize this loan over the first 2 months. Kim would be able to get a mortgage a

Question 934252: Kim Barnes bought a new home for 250,000. She made a 30% down payment and got a 4% 20 year loan. Amortize this loan over the first 2 months. Kim would be able to get a mortgage at 3.5%. Is it worth it for Kim to pay one point for the lower interest rate? Support your answer with numbers.
Answer by ptfile(81) (Show Source): You can put this solution on YOUR website!

Let A = Periodic amount
    R = Interest rate
    N = Number of intervals
    P = Principal
    T = Duration of the loan

Downpayment
(250000)(.30)=75000
250000-75,000=175000









Payment Amount Interest Principal Balance
0                                 175000
1       1060.47 583.33   477.13   174522.87
2       1060.47 581.74   478.72   174044.15









Payment Amount Interest Principal Balance
0                                 175000
1       1014.93 510.42    504.51  174495.49
2       1014.93 508.95    505.98  173989.50

It would be beneficial for Kim to get a lower interest rate for her mortgage.

RELATED QUESTIONS
Jennifer Kaufman bought a used Toyota Prius for $17,500. She made a $4,500 down payment... (answered by Boreal)

A couple wishes to borrow money using the equity in their home for collateral. A loan... (answered by ikleyn)

What is the loan payment for a $128,000 home bought with a 20% down payment and the... (answered by jim_thompson5910)

You want to buy a $250,000 home. You plan to pay 20% as a down payment, and take out a 30 (answered by math_tutor2020)

You want to buy a $224,000 home. You plan to pay 10% as a down payment, and take out a 30 (answered by Boreal)

Hello Tutors, I will appreciate it if you help me solve this question. Thank you in... (answered by Theo)

. You are considering borrowing $150,000 to purchase a new home. a. Calculate the... (answered by ewatrrr)

Find the monthly payment for the loan. (Round your answer to the nearest cent.) A... (answered by reviewermath)

Find the monthly payment for the loan. (Round your answer to the nearest cent.) A... (answered by Theo)