You pay down 20% on a home with a purchase price of $150,000. The bank will loan you the remaining balance at 6.84% APR. You have an option to make annual payments with a 20-year payment schedule. What is the annuity payment under the annual plan? Is this a better deal than an option to make a monthly plan of payments? Explain in terms of the effective cost of borrowing.

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The Answer of You pay down 20% on a home with a purchase price of $150,000. The bank will loan you the remaining balance at 6.84% APR. You have an option to make annual payments with a 20-year payment schedule. What is the annuity payment under the annual plan? Is this a better deal than an option to make a monthly plan of payments? Explain in terms of the effective cost of borrowing.

You Pay Down 20% on a Home with a Purchase