what rule can one apply to determine if a settlement (closing) cost should be included in the calculation of the effective borrowing cost?

Please give three examples of upfront financing costs associated with residential mortgage.  Next, what rule can one apply to determine if a settlement (closing) cost should be included in the calculation of the effective borrowing cost?

 

Mortgage Borrowing

A homeowner is attempting to decide between a 15 year mortgage loan at 5.5 percent and a 30 year loan at 5.9 percent.  What would you advise? What would you advise if the borrower also has a large amount of credit card debt outstanding at a rate of 15 percent?

Answer

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