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5.5.2 Quiz: Credit Scores

Martina just opened both a checking account and a savings account for the first time, so her credit score rose from 665 to 725. According to the following table for a \[tex]$150,000 mortgage, how much less per year would Martina have to pay on a \$[/tex]150,000 mortgage with the new credit score?

\begin{tabular}{|c|c|c|}
\hline
\begin{tabular}{r}
FICO \\
score
\end{tabular} & \begin{tabular}{c}
Interest \\
rate
\end{tabular} & \begin{tabular}{l}
Monthly \\
payment
\end{tabular} \\
\hline [tex]$720-850$[/tex] & [tex]$5.59\%$[/tex] & [tex]$\$[/tex]860[tex]$ \\
\hline $[/tex]700-719[tex]$ & $[/tex]5.71\%[tex]$ & $[/tex]\[tex]$872$[/tex] \\
\hline [tex]$675-699$[/tex] & [tex]$6.25\%$[/tex] & [tex]$\$[/tex]924[tex]$ \\
\hline $[/tex]620-674[tex]$ & $[/tex]7.40\%[tex]$ & $[/tex]\[tex]$1039$[/tex] \\
\hline [tex]$560-619$[/tex] & [tex]$8.53\%$[/tex] & [tex]$\$[/tex]1157[tex]$ \\
\hline $[/tex]500-559[tex]$ & $[/tex]9.29\%[tex]$ & $[/tex]\[tex]$1238$[/tex] \\
\hline
\end{tabular}

A. \[tex]$2148
B. \$[/tex]179
C. \[tex]$860
D. \$[/tex]1039

Sagot :

GinnyAnswer
Let's solve the problem step by step to determine how much less per year Martina would have to pay on a [tex]$150,000 mortgage with her new credit score. 1. Identify the monthly payments for the old and new credit scores: Looking at the provided table: - For a FICO score of 665, the monthly payment is $[/tex]924.
- For a FICO score of 725, the monthly payment is [tex]$860. 2. Calculate the difference in the monthly payments: Difference in monthly payments = Old monthly payment - New monthly payment \[ 924 - 860 = 64 \] So, Martina saves $[/tex]64 each month with her new credit score.

3. Calculate the annual savings:

Annual savings = Monthly savings [tex]\(\times\)[/tex] 12 (months)
[tex]\[ 64 \times 12 = 768 \][/tex]

Therefore, Martina would save $768 per year with her new credit score.
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