Mr. and mrs. zeller close on a 20 year home loan for $150,000. the monthly payment with no points is $1,160, but if they buy a point it is $1,150. what might you infer if mr. and mrs. zeller choose not to buy a point?

Given:
home loan - 150,000
term - 20 years

a point is 1% of the loan.
150,000 * 1% = 1,500

monthly payment with no point 1,160
monthly payment with a point is 1,150

When Mr. and Mrs. Zeller chose not to buy a point, this means that they have the ability to pay the home loan at a given rate for 20 years. They have the capability to pay the monthly amortization. They also can pay off the loan before the 20 year term is up.

Buying a point means that the monthly amortization will be lower as well as the interest rate.