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A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with
- A borrower has secured a 30 year, $150,000 loan at 7% with monthly payments. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 6%. However, the up front fees, which will be paid in cash, are $5,500. What is the return on investment if the borrower expects to remain in the home for the next fifteen years?
- 2. Bud is offering a house for sale for $200,000 with an assumable loan which was made 5 years ago for $140,000 at 8.75% over 30 years. The balance of this loan is $133,964.54. Kelsey is interested in buying the property and can make a $20,000 down payment. A second mortgage can be obtained for the difference at 12.5% for 25 years. What is the effective cost of the combined loans, if Kelsey would like to compare this financing alternative to obtaining a first mortgage for the full amount?
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