Question
Home Brad and Ashley purchased a four-bedroom house for $170,000 in a nice family neighborhood. They were among the first families to purchase a home
Home Brad and Ashley purchased a four-bedroom house for $170,000 in a nice family neighborhood. They were among the first families to purchase a home in this new subdivision. The money received from Sarah's parents as a wedding gift was used for the down payment. The mortgage payment is $1,066.52 per month. Due to prior credit problems, the couple could only secure an interest rate of 7.5%. However, their credit scores today are in the lower 700s, which is considered in the good range. The original mortgage was $152,531.47, and they have made 29 payments. Utilities range from $400-500 per month. Although the original value of the house was $170,000, a recent appraisal valued the house at $149,000. The decrease in value did not leave enough equity for the Smiths to be approved for a home equity loan. If the Smiths wanted to refinance (80% of the fair market value of the home), the 3% closing costs would have to be paid at closing and not financed. Assuming that the Smiths decide to use their savings account to pay down the mortgage so they are able to refinance their current mortgage, calculate the monthly payment (principal + interest) for each of the terms below. Assume their new mortgage balance after refinancing is $101,198. For purposes of this question, disregard whether the Smiths qualify to refinance their home. Round your answer to 2 decimal places.
15 year loan Savings account = $13,500
Mortgage rate for 15 years = 3.2%
Annual Inflation 4%
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