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You have two competing loans towards choosing mortgage for $170,000. Both the loans are fully...

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Finance

You have two competing loans towards choosing mortgage for $170,000. Both the loans are fully amortizing loans. Alternative A is a 20-year loan at 6.6% with 6 points payable up front. Alternative B is a 20-year loan at 7.2% with 2 points payable upfront.

  1. Which alternative is better assuming you plan to stay with the loan for 20 years? Why?
  2. Which alternative is better assuming you plan to stay with the loan for 8 years? Why?

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