7 years ago a fixed rate mortgage for $ 100,000 was issued which would fully amortize monthly in 20 years. The contract rate was 8%. Refinancing costs $. 3,000 100000=PMT*[1-(0.67%)^-2401/.067%-836.44 Now tha rates have fallen to 6%. What is the monthly payment? $836.44 PV=836.44*(1-(1+0.0067)^-156/0.0067-80966.14 What is the loan balance? $80266.14 What is the Break-even rate for refinancing? BER Is refinancing a good idea? Independent of your answer in 1d., let's say, you opt for refinancing. If refinancing means a full cash-out, how much will it be? What is the loan value now given the new rate? PV based on new rate Re-financed PV Cash Out 7 years ago a fixed rate mortgage for $ 100,000 was issued which would fully amortize monthly in 20 years. The contract rate was 8%. Refinancing costs $. 3,000 100000=PMT*[1-(0.67%)^-2401/.067%-836.44 Now tha rates have fallen to 6%. What is the monthly payment? $836.44 PV=836.44*(1-(1+0.0067)^-156/0.0067-80966.14 What is the loan balance? $80266.14 What is the Break-even rate for refinancing? BER Is refinancing a good idea? Independent of your answer in 1d., let's say, you opt for refinancing. If refinancing means a full cash-out, how much will it be? What is the loan value now given the new rate? PV based on new rate Re-financed PV Cash Out