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3241004551 [841]
3 years ago
13

Kevin's bank offered him a 4.5% interest rate for his mortgage. If he purchases 3 points, what will be his new rate?

Mathematics
1 answer:
erma4kov [3.2K]3 years ago
7 0

Answer:

The new rate would be  3.75%

Step-by-step explanation:

Purchasing a point simply implies negotiating for a lower rate of interest, which involves paying 1% of the loan in lieu of 1% interest reduction.

A point implies a reduction in interest rate by 0.25% while 3 points would reduce the interest rate by 0.75%(0.25%*3)

New interest rate=4.5%-0.75%=3.75%

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