Finance Essay

736 Words Nov 14th, 2015 3 Pages
Saudi Wells Running Dry — of Water — Spell End of Desert Wheat
Saudi Arabia, at one point, grew so much grain that they could fee Kuwait, United Arab Emirates, Quatar, Bahrain, Oman and Yeman (Blas, Javier; Saudi Wells Running Dry — of Water — Spell End of Desert Wheat). Unfortunately, that is no longer the case. The lack of rain and essentially hot weather, has caused the water to run dry, in turn causing their wheat crops to die. Saudi Arabia’s inability to produce wheat, has caused them to look elsewhere for their own supply, looking for imports and naming the Saudi’s "The largest new wheat buyer to emerge," (Blas, Javier; Saudi Wells Running Dry — of Water — Spell End of Desert Wheat). According to Ahmed bin Abdulaziz Al-Fares,
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How the borrower chooses to pay the loan back, will determine how much money the lender will ultimately make on their investment. Borrowers often times have options when it comes to determining their own interest rates. For example, a borrower can “buy down” the rate, meaning they pay a fee at settlement to reduce the interest rate over the length of the loan. This option can be especially helpful to a borrower taking out a 30 year mortgage and therefore the decision to buy down the rate should be determined based on the length of the mortgage.
The length of the loan influences the interest rate. Normally, the longer the loan duration, the higher the rate will be, in turn the borrower will ultimately pay more interest to the lender.
Example (rates and calculations based on PFFCU.com): Term | Percent | Amount | Monthly payment | Total payment | Total interest | 30 | 3.8 | 200,000 | 931.91 | 335,491 | 135,491 | 20 | 3.6 | 200,000 | 1170.22 | 280,854 | 80,854 | 15 | 3.1 | 200,000 | 1119.23 | 268,617 | 68,617 | The difference in savings based on the final payment is $66,874.00 between a 30 and 15 year mortgage with just 187.26 more per month when selecting the 15 year option. Ultimately, the faster you pay the loan back, the less interest is paid.

Work cited:
Blas, Javier. "Saudi Wells Running Dry."

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