You are purchasing a home for $ 120 , 000 and are shopping for a loan. You have a total of $ 31 , 000 to put down, including the closing costs of $ 1000 and any loan fee that might be charged. Bank A offers a 10 % APR amortized over 30 years with 360 equal monthly payments. There is no loan fee. Bank B offers a 9.5 % APR amortized over 30 years with 360 equal monthly payments. There is a 3 % loan fee (i.e., a one-time up-front charge of 3 % of the loan). Which loan is better?
You are purchasing a home for $ 120 , 000 and are shopping for a loan. You have a total of $ 31 , 000 to put down, including the closing costs of $ 1000 and any loan fee that might be charged. Bank A offers a 10 % APR amortized over 30 years with 360 equal monthly payments. There is no loan fee. Bank B offers a 9.5 % APR amortized over 30 years with 360 equal monthly payments. There is a 3 % loan fee (i.e., a one-time up-front charge of 3 % of the loan). Which loan is better?
Solution Summary: The author explains that the loan from bank B is a better option for loan.
You are purchasing a home for
$
120
,
000
and are shopping for a loan. You have a total of
$
31
,
000
to put down, including the closing costs of
$
1000
and any loan fee that might be charged. Bank A offers a
10
%
APR amortized over 30 years with 360 equal monthly payments. There is no loan fee. Bank B offers a
9.5
%
APR amortized over 30 years with 360 equal monthly payments. There is a
3
%
loan fee (i.e., a one-time up-front charge of
3
%
of the loan). Which loan is better?
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