The Ruffins are negotiating with two banks for a mortgage to buy a house selling for $115,000. The terms at bank A are a 20​% down​ payment, an interest rate of 10.5​%, a 30-year conventional​ mortgage, and 3 points to be paid at the time of closing. The terms at bank B are a 15​% down​ payment, an interest rate of 10.0​%, a 25​-year conventional​ mortgage, and no points. Which loan should the Ruffins select in order for the total cost of the house to be​ less?

Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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The Ruffins are negotiating with two banks for a mortgage to buy a house selling for
$115,000.
The terms at bank A are a
20​%
down​ payment, an interest rate of
10.5​%,
a
30-year
conventional​ mortgage, and
3
points to be paid at the time of closing. The terms at bank B are a
15​%
down​ payment, an interest rate of
10.0​%,
a
25​-year
conventional​ mortgage, and no points. Which loan should the Ruffins select in order for the total cost of the house to be​ less?
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