LaShon Vega is purchasing a $250,000 with a 20% down payment. Her lender offers her a 30-year fixed mortgage rate of 5.5% or an opportunity to pay two points to reduce that rate to 5.25%. Show work:
a) How much will the rate reduction cost her?
b) What are her monthly mortgage payments under both options?
c) Assuming she sells retains the home for 20 years which mortgage option should she accept?
d) Assuming she sells the home after 10 years, which mortgage option should she accept?