Question
Consider a 25-year, $205,000 mortgage with a rate of 6.65 percent. Four years into the mortgage, rates have fallen to 5.35 percent. Suppose the transaction
Consider a 25-year, $205,000 mortgage with a rate of 6.65 percent. Four years into the mortgage, rates have fallen to 5.35 percent. Suppose the transaction cost of obtaining a new mortgage is $2,250.
Should the homeowner refinance at the lower rate?
- multiple choice
yes
no
Quantify the effect of the homeowner's decision.
Note: Do not round intermediate calculations. Round your answer to 2 decimal places.
monthly savings:
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Investments
Authors: Zvi Bodie, Alan J. Marcus, Alex Kane
6th Edition
0072861789, 9780072861785
