Consider the following options available to a mortgage borrower:
Loan Amount
Interest Rate
Type of Mortgage
Discount Point
Option 1
$100,000
6.75%
30-yr fixed
none
Option 2
$150,000
6.25%
30-yr fixed
1
Option 3
$125,000
6.0%
30-yr fixed
2
What is the effective annual rate for each option?
