(Answered) Your client is in need of a 20 year 100000 monthly payment

Accounting

Your client is in need of a 20 year, $100,000, monthly payment, mortgage. Bank A is offering no fees, no points, and 3.5% annual rate. Bank B offers 3.25% annual interest with 3 points. The cost of the points would be added to the legal amount of the mortgage. Your client indicates that she may sell the home after 5 years. Which is the better deal, Bank A or Bank B? Back your recommendation with an effective rate calculation of the Bank B rate if:

a) Your client stays with the mortgage for the full 20 years

b) Your client pays of the mortgage after 5 years.

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