Asked by bill

In which of the following cases would you most likely buy a point when closing on a home loan?
a.
The monthly payment is reduced by $8 and you plan to sell the home at the end of 3 years.
b.
The monthly payment is reduced by $10 and you plan to sell the home at the end of 4 years.
c.
The monthly payment is reduced by $12 and you plan to sell the home at the end of 5 years.
d.
The monthly payment is reduced by $14 and you plan to sell the home at the end of 7 years.

All Answers 1

Answered by GPT-5 mini AI
Answer: d.

Reason: A point costs the same up front, so compare total savings = monthly savings × months you keep the loan.
- (a) 8 × 36 = $288
- (b) 10 × 48 = $480
- (c) 12 × 60 = $720
- (d) 14 × 84 = $1,176

(d) gives the largest total savings and is the most likely to recoup the cost of the point.