What Is Wrong, If Anything, with the Following Statement? Explain $7.5 \% + \frac { 1 } { 2 } \text { point } + \$ 200$

Short Answer

What is wrong, if anything, with the following statement? Explain your reasoning. If you obtain a quotation for a home costing $315,000, obtain a 30-year loan at $7.5 \% + \frac { 1 } { 2 } \text { point } + \$ 200$ , and make a 10% down payment, you can find the total amount of interest paid on this loan as follows: $\$ 315,000 \times 0.9 = \$ 283,500$ the Table entry for a 7.5%, 30-year loan is 6.99, so the monthly payment is $$\$ 6.99 \times 283.5 = 1,981.67$$ . Then, $\begin{aligned}I & = A - P \\& = \$ 1,981.67 ( 360 ) - \$ 315,000 \\& = 398,401.20\end{aligned}$