The new rate would be 3.75% when Peter's bank offered him a 4.95% interest rate for his mortgage. If he purchases 3 points.
What is a mortgage?
A mortgage exists as an arrangement between you and a lender that provides the lender the right to consider your property if you forget to repay the money you've borrowed plus interest.
Mortgage loans exists utilized to buy a home or to borrow money against the significance of a home you already possess.
Purchasing a point simply implies negotiating for a lower rate of interest, which involves paying 1% of the loan in lieu of a 1% interest reduction.
A point implies a reduction in interest rate by 0.25% while 3 points would reduce the interest rate by 0.75%(0.25%*3)
New interest rate = 4.5% - 0.75% = 3.75%
Therefore, the correct answer is option C. 4.575
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