Naomi is working with her mortgage lender on the terms of her new $100,000 30-year, fixed-rate mortgage. The lender offers a rate of 4.5% APR with no points (monthly payment $506) and 4.25% with one point (monthly payment $492) . If Naomi plans to live in the house for 5 years, does it make sense for her to pay the point?
A) No, 7.1 years is breakeven.
B) No, 6 years is breakeven.
C) Yes, 7 months is breakeven.
D) Yes, 6 months is breakeven.
Correct Answer:
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