Question
Consider a 30-year, $160,000 mortgage with a rate of 6.9 percent. Eight years into the mortgage, rates have fallen to 5.6 percent. Suppose the transaction
Consider a 30-year, $160,000 mortgage with a rate of 6.9 percent. Eight years into the mortgage, rates have fallen to 5.6 percent. Suppose the transaction cost of obtaining a new mortgage is $1,700.
a.Should the homeowner refinance at the lower rate?
- Yes
- No
b.Quantify the effect of the homeowner's decision.(Do not round intermediate calculations. Round your answer to 2 decimal places.)
Monthly Savings:
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Financial Accounting Fundamentals
Authors: John J. Wild
5th edition
1308500102, 1308500106, 78025753, 978-0078025754
