A community for students.

Here's the question you clicked on:

55 members online
  • 0 replying
  • 0 viewing

anonymous

  • one year ago

Please help! Need it urgently! Will fan and medal! Madison is financing $382,300 to purchase a house. How much money will she save over the life of a 30 year, fixed rate loan by buying 3 points with a rate of 5.13% instead of not buying points with a rate of 5.88%? Round to the nearest dollar $60,948 $63,242 $53,302

  • This Question is Closed
  1. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    @mathmate can you help me? I think it's $63,242 but I'm not sure. .

  2. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    First, it is important to understand what is meant by "buying 3 points". Each point reduces the interest rate by 0.25%, so 5.88% becomes 5.13% after buying three points. The actual amount paid for each point is irrelevant here.

  3. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    If you chose $63242, how much did you get for the monthly payment at each interest rate?

  4. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    For the 5.88% interest rate I got $374 for monthly payments for 30 years

  5. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    For the 5.13% I got $345 for monthly payments for 30 years

  6. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    I'm not sure $345 is right. $345*30 years *12months/year = 124200 which is not even one third of the money borrowed.

  7. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    This is the calculator I used :/ https://www.creditkarma.com/calculators/amortization

  8. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    @mathmate do you know a formula I can use or can you walk me through it please?

  9. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    The calculator is correct, but don't know what numbers you put in: Principal is 382300 interest is 5.88% p.a. (or 5.13% p.a.) # of years is 30. I do not get $345. Can you try it again? After that, we can look at formulas.

  10. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    Ah I see! Sorry, I think I put the 63,242 instead of 382,300 :/ Okay so using the 5.88% interest rate, the monthly payments are $2,263. And the 5.14% interest rate gives a monthly payment of 2,083

  11. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    A few corrections: 1. the interest rates are 5.88% and 5.13% 2. I do not get any of the given answers, even though one of them is closer to mine. Can you check if the principal is indeed 382300, and not for example 373300?

  12. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    The principal is $382,300. I used the interest rate 5.13% but didn't check before I sent it to you but I did use 5.13 not 5.14.

  13. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    It shows me that the Monthly Principal & Interest is $2,083 for 5.13%

  14. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    The answer is then the difference, and multiplied by 360 months, or (2263-2083)*360 which gives $64800. A more accurate calculation can be done using formulas: Let A=amount borrowed P=monthly payment R=1+monthly interest n=number of months Then P=\(\Large \frac{AR^n*(R-1)}{R^n-1}\) which gives monthly payments of $2262.67 and $2082.75 respectively. Over 30 years, the difference is $64771.45

  15. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    I am not able to reproduce exactly any of the give answers. If your teacher shows you a way to do that, please post the explanations.

  16. anonymous
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 0

    No he hasn't given us any formulas or anything to find the answer, that's why I needed help. But thank you so much for your help and your patience!

  17. mathmate
    • one year ago
    Best Response
    You've already chosen the best response.
    Medals 1

    no problem! Please use the formula to check my calculations. Let me know if you find anything wrong.

  18. Not the answer you are looking for?
    Search for more explanations.

    • Attachments:

Ask your own question

Sign Up
Find more explanations on OpenStudy
Privacy Policy

Your question is ready. Sign up for free to start getting answers.

spraguer (Moderator)
5 → View Detailed Profile

is replying to Can someone tell me what button the professor is hitting...

23

  • Teamwork 19 Teammate
  • Problem Solving 19 Hero
  • You have blocked this person.
  • ✔ You're a fan Checking fan status...

Thanks for being so helpful in mathematics. If you are getting quality help, make sure you spread the word about OpenStudy.

This is the testimonial you wrote.
You haven't written a testimonial for Owlfred.