a first-time home buyer is given the choice of two loans: \nloan a | loan b\n$390,000 15 year - fixed 4…

a first-time home buyer is given the choice of two loans: \nloan a | loan b\n$390,000 15 year - fixed 4 discount points m = $3,509.71 | $390,000 15 year - fixed 0 discount points m = $3,659.86 \nhow much does the home buyer save in total by choosing loan a? \n$27,027.00 \n$11,427.00 \n$26,351.02 \n$42,627.05

a first-time home buyer is given the choice of two loans: \nloan a | loan b\n$390,000 15 year - fixed 4 discount points m = $3,509.71 | $390,000 15 year - fixed 0 discount points m = $3,659.86 \nhow much does the home buyer save in total by choosing loan a? \n$27,027.00 \n$11,427.00 \n$26,351.02 \n$42,627.05

Answer

Explanation:

Step1: Calculate total payment for Loan A

First, find the total number of months in 15 years: ( 15 \times 12 = 180 ) months.
The monthly payment for Loan A is ( $3,509.71 ), so total payment for Loan A is ( 3509.71 \times 180 ).
( 3509.71 \times 180 = 631747.8 )

Step2: Calculate total payment for Loan B

The monthly payment for Loan B is ( $3,659.86 ), so total payment for Loan B is ( 3659.86 \times 180 ).
( 3659.86 \times 180 = 658774.8 )

Step3: Calculate the discount points cost for Loan A

4 discount points mean ( 4% ) of the loan amount. The loan amount is ( $390,000 ), so discount points cost is ( 0.04 \times 390000 = 15600 ).

Step4: Adjust Loan A's total cost (payment + discount points)

Total cost for Loan A: ( 631747.8 + 15600 = 647347.8 )

Step5: Calculate savings (Loan B total - Loan A total)

Savings = ( 658774.8 - 647347.8 = 11427 )

Answer:

$11,427.00