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A homeowner bought a property for $300,000 5 years ago. He got a $250,000 loan at 9% for 30 years, the loan require monthly payments
A homeowner bought a property for $300,000 5 years ago. He got a $250,000 loan at 9% for 30 years, the loan require monthly payments and is fully amortized. Currently mortgage rate for 25-year loan is at 7.5%. There is 2% origination fee charged on the new loan amount. All payments are monthly. What is the return on the investment (2% of the loan amount to refinance the mortgage)? Assume that the homeowner will stay for the remaining loan term? 68.02% 60.12% 71.42% 58.91%
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