Answered

Jack is buying a condominium that sells for $120000. The bank is requiring a minimum down payment 20%. To obtain a 20 year mortgage at 7.5% inches, Jack must pay 3 point at the time of closing. What is the cost of the 3 points on the mortgage?

Answer :

Jacks condominium costs $120000

The down paymennt required for the mortgage = 20/100 x 1200000 = $24000

For each month he will pay

[tex]c\text{ = }\frac{P(1+r)^N}{(1+r)^N-1}[/tex]

Where

[tex]\begin{gathered} c=\text{ payment monthly} \\ r=\text{ monthly interest rate} \\ N\text{ = no of months of payments} \end{gathered}[/tex]

P = $120000 - 24000 = $96000

A 3 point pay = 3% = 3/100= 0.03

If at the close he must pay 3 points on the mortgage, then this will be 0.03 x96000 = $2880

So he must p

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