New Home, New Adventure: Wally's Exciting Journey!

How much will the points cost Wally?

What will the points cost Wally?

Answer:

The points will cost Wally $7,000.

Wally Bee recently purchased a new home for $450,000 with a down payment of $50,000. He financed the remainder of the home purchase with a 3% mortgage for 30 years. However, Wally's bank has offered to lower the 3% interest rate on his 30-year loan to 2.75% if Wally agrees to pay 1 3/4 points.

To calculate the cost of the points, we need to find 1 3/4 percent of the loan amount. The loan amount is calculated by subtracting the down payment from the purchase price, which results in $400,000.

1 3/4 percent of the loan amount can be calculated as follows:

1.75% of $400,000 = (1.75/100) * $400,000 = $7,000

Therefore, the points will cost Wally $7,000.