Explore BrainMass

# Mortgage Points

Not what you're looking for? Search our solutions OR ask your own Custom question.

This content was COPIED from BrainMass.com - View the original, and get the already-completed solution here!

Home loans typically involve "points", which are fees charged by the lender. Each point charged means that the borrower must pay 1 percent of the loan amount as a fee. For example, if the loan is for \$100,000, and two points are charged, the loan repayment schedule is calculated on a \$100,000 loan, but the net amount the borrower receives is only \$98,000. What is the effective annual interest rate charged on such a loan assuming loan repayment occurs over 360 months? Assume the interest rate is 1 percent per month.

© BrainMass Inc. brainmass.com October 4, 2022, 3:57 pm ad1c9bdddf

#### Solution Preview

For this loan, we use 100,000 as the present value to compute the mortgage.
Then the monthly interest rate = 1%
Number of months = 360
By a ...

#### Solution Summary

This Solution contains calculations to aid you in understanding the Solution to this question.

\$2.49