1) Your cousin Michael is purchasing a home for $225,000 and taking out a $170,000 mortgage at 7% interest amortized over 25 years. He is paying 3 discount points and a 1% origination fee. What annual percentage rate is Michael paying on the loan if it is expected to run the full 25 years?
2) f Michael (in problem 2) knows he is going to stay in this house only five years and then plans to sell the house, what will his APR be?