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7. A borrower has secured a 30 year, $100,000 loan at 8%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen
7. A borrower has secured a 30 year, $100,000 loan at 8%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 7%. However, the up-front fees, which will be paid in cash, are $2,000.
- What is the monthly payment on the initial loan?
- What is the loan balance at the time of refinancing?
- What is the return on investment if the borrower expects to remain in the home for the next fifteen years after refinancing?
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