Without buying points, a monthly mortgage payment will be $1,250. Buying 1 point at closing would reduce the payment to $1,236. To the nearest year, how long would it take to break even by buying 1 point, with a $100,000 mortgage?

One point costs 1% of the $100,000 mortgage, or $1,000. The monthly payment savings are $1,250 − $1,236 = $14, so it takes about $1,000 ÷ $14 = 71.4 months to recover the cost. That is about 5.95 years, which rounds to 6 years, choice b.

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