Financial economics

Value of the house 500,000. You are using a 30-year mortgage. Also, you are putting down 20%. (Please show your work)

You have two options:

  • a. Mortgage rate of 4.5% with no points.
  • b. Mortgage rate of 4.35% and 1.5 points.

Which option should you choose? (calculate the present value of future savings)