You plan to purchase a house for $127,000 using a 15-year mortgage obtained from your local...

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You plan to purchase a house for $127,000 using a 15-yearmortgage obtained from your local bank. You will make a downpayment of 10 percent of the purchase price. You will not pay offthe mortgage early. Assume the homeowner will remain in the housefor the full term and ignore taxes in your analysis.
a. Your bank offers you the following two options for payment.Which option should you choose?
Option 1: Mortgage rate of 5.75 percent and zero points.
Option 2: Mortgage rate of 5.45 percent and 2 points.
b. Your bank offers you the following two options for payment.Which option should you choose?
Option 1: Mortgage rate of 6.25 percent and 2 point.
Option 2: Mortgage rate of 6 percent and 2.5 points.

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You plan to purchase a house for $127,000 using a 15-yearmortgage obtained from your local bank. You will make a downpayment of 10 percent of the purchase price. You will not pay offthe mortgage early. Assume the homeowner will remain in the housefor the full term and ignore taxes in your analysis.a. Your bank offers you the following two options for payment.Which option should you choose?Option 1: Mortgage rate of 5.75 percent and zero points.Option 2: Mortgage rate of 5.45 percent and 2 points.b. Your bank offers you the following two options for payment.Which option should you choose?Option 1: Mortgage rate of 6.25 percent and 2 point.Option 2: Mortgage rate of 6 percent and 2.5 points.