Mathematics, 29.05.2020 23:08 wednesdayA
Howard must decide if he will purchase discount points for his mortgage. Two discount points which cost 2% of the mortgage amount will result in a 0.5% decrease in the interest rate. The terms of the mortgage are shown below.
Howard's Mortgage $423,000 30 year fixed 4.5% annual rate 2 discount points M $2,143 28 5% annual rate 0 discount points M = $2.270 76
Howard plans to stay in his house for about five years. Should Howard purchase the two discount points? Explain your reasoning.
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