Assignment Two

Be sure to show our work and write as if you are communicating with your clients.

With the recent fall in interest rates, Jason and Sara would like your advice on refinancing their mortgage. Based on an independent analysis, the current valuation of their house estimated the value at $275,000. The Browns received the following estimates:

	Bank of America	Loan Deport
Term	30 years	30 ears
Interest rate	2.905	2.915
Closing Cost*	$10,800	$8,500
Time to Close	30 days	30 days
Points	$5,500 for .025%	$2,000 for 0.035%

*The Prepaids (escrow insurance and taxes) are identical, but the origination and attorney fees are different.

Using the information above, answer the following questions.

1. Given the information above, what is the estimated monthly payment for each mortgage?

2. What is the monthly mortgage payment if they should purchase the points for each mortgage.

3. Based on your analysis. Should they refinance? Which loan should they take? Should they buy points? Overall, what will be their monthly mortgage payment once the insurance and interest are taken into consideration.

4. How will your overall recommendation impact the Browns family cash flow.

Current mortgage information:

Jason and Sara purchased their primary residence one year ago for $250,000. They closed on their home in November 2019. Their down payment was $12,500, and the remainder was a mortgage. The interest on the mortgage is 6%, and the term is 30 years. Their monthly principal and interest payment towards their mortgage is $1,423.93. They currently have a mortgage with QRC Bank, which is owned and operated by a close family friend.$260,000. Both Jason and Sara have a good credit history, and their scores are slightly below 800.