Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

B: Ransford and Alda Mariano own a home recently appraised for $428,500. The balance on their existing mortgage is $133,087. If their bank is willing

image text in transcribedimage text in transcribed

B: Ransford and Alda Mariano own a home recently appraised for $428,500. The balance on their existing mortgage is $133,087. If their bank is willing to loan up to 80% of the appraised value, what is the amount of credit available to them (in $)? $ C: According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,578.50 per month, with a balance of $219,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.75% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, 5560. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage. MORTGAGE REFINANCING WORKSHEET STEP 1. Current monthly mortgage payment. STEP 2. New monthly mortgage payment if you refinance. New rate Current mortgage balance Table 14-1 factor x # of 1,000s to borrow STEP 3. Monthly savings.... Step 1. Step 2. STEP 4. Total refinance closing costs (appraisal, title search, etc.)... STEP 5. Total months needed to recoup your costs... Step 4 result = Step 3 result STEP 6. Total months you plan to live in your home..... The Bottom Line-If you plan to live in your home longer than the result in Step 5, it makes sense to refinance. (a) What is your currently monthly mortgage (in $)? $ 1578.50 (b) Using this table, what is your new monthly mortgage payment (in $) if you decide to refinance? (Round your answer to the nearest cent.) $ (c) What is your monthly savings in $) if you decide to refinance? (Round your answer to the nearest cent.) $ (d) Calculate the total refinance closing cost (in $). (Round your answer to the nearest cent.) $ 2964.2 X (e) How many months would you need to recoup the refinance closing cost? (Round your answer up to the nearest month.) months (e) How many months are you planning to live in your home? months (9) If you're planning to live in your home for at least four more years, does it make sense to refinance your mortgage? o Yes, it makes sense to refinance. No, it does not make sense. B: Ransford and Alda Mariano own a home recently appraised for $428,500. The balance on their existing mortgage is $133,087. If their bank is willing to loan up to 80% of the appraised value, what is the amount of credit available to them (in $)? $ C: According to money.CNN.com, with mortgage rates near 35-year lows, you may be able to cut your payments sharply by refinancing your loan. To qualify for the best rates, you need a credit score of 740 or higher and usually at least 20% equity. Even if you have to settle for a higher rate, a new loan may save you money. The main consideration is whether you will live in your home long enough to offset the refinance closing costs. Your current mortgage payment is $1,578.50 per month, with a balance of $219,800. Suppose you have a chance to refinance at a certain bank with a 30-year, 5.75% mortgage. The closing costs of the loan are application fee, $80; credit report, $165; title insurance, 0.4% of the amount financed; title search, $360; and attorney's fees, 5560. You plan to live in your home for at least four more years. Use the Mortgage Refinancing Worksheet to see if it makes sense to refinance your mortgage. MORTGAGE REFINANCING WORKSHEET STEP 1. Current monthly mortgage payment. STEP 2. New monthly mortgage payment if you refinance. New rate Current mortgage balance Table 14-1 factor x # of 1,000s to borrow STEP 3. Monthly savings.... Step 1. Step 2. STEP 4. Total refinance closing costs (appraisal, title search, etc.)... STEP 5. Total months needed to recoup your costs... Step 4 result = Step 3 result STEP 6. Total months you plan to live in your home..... The Bottom Line-If you plan to live in your home longer than the result in Step 5, it makes sense to refinance. (a) What is your currently monthly mortgage (in $)? $ 1578.50 (b) Using this table, what is your new monthly mortgage payment (in $) if you decide to refinance? (Round your answer to the nearest cent.) $ (c) What is your monthly savings in $) if you decide to refinance? (Round your answer to the nearest cent.) $ (d) Calculate the total refinance closing cost (in $). (Round your answer to the nearest cent.) $ 2964.2 X (e) How many months would you need to recoup the refinance closing cost? (Round your answer up to the nearest month.) months (e) How many months are you planning to live in your home? months (9) If you're planning to live in your home for at least four more years, does it make sense to refinance your mortgage? o Yes, it makes sense to refinance. No, it does not make sense

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Analyzing Data And Making Decisions Statistics For Business Microsoft Excel 2010 Updated

Authors: Judith Skuce

2nd Edition

9780132844727, 013292496X, 132844729, 978-0132924962

More Books

Students also viewed these Accounting questions

Question

=+b) Use it to predict the value for January 2007. Section 19.4

Answered: 1 week ago