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Part II - Mortgage Refinance Suppose your friend April is considering to refinance her mortgage. She months ago at S 127,000. She paid cash to

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Part II - Mortgage Refinance Suppose your friend April is considering to refinance her mortgage. She months ago at S 127,000. She paid cash to cover the 5% down payment plus all required closing costs (closing costs include application foe, appraisal fee, loan origination usually about 3%-5% of the loan amount). Since she had a decent credit history and relatively stable income, her mortgage rate was 5.25% for 30 years at the time of the purchase. Since down payment was less than 20% she had to pay monthly mortgage insurance premium which is $60 per month (premiums are automatically terminated when the LTV ratio (loan-to-value ratio falls below 80%). bought her house 60 fees and other costs, her Recently, mortgage rate has been dropping and she is considering to refinance her mortgage. She talked with a mortgage banker and got the following information: 3.75% 30 year conventional loan with out-of-pocket closing costs of S 1,800; b) a) 3.5% 30 year conventional loan with out-of-pocket closing costs of $3,000; c) 3.25% 30 year conventional loan with out-of-pocket closing costs of$4,000. Based on the recent appraisal, her house value has gone up to $151,000. Please advise her on the following: 1) Based on the information, please calculate her monthly mortgage payment on the original loan. Please show your process. 2) Please use online resources to show her amortization table. How much principle has she 3) 4) 5) paid off so far? How much interest has she paid over the past 60 payments? How much does she need to refinance now? Hint: You need to find her loan balance. Based on the new appraisal value, what is her LTV (loan-to-value) ratio now? Does she still need to pay the mortgage insurance premium after refinancing? Why? o) How much should her monthly payment be under each option (a, b, and e)? Show your 7) Would you suggest her to do the refinancing or not? Why? Notice that monthly payment calculations is reduced but she need to make 360 payments plus closing costs under the new mortgage versus 300 payments in the old mortgage. 8) Which option would you suget her kfs would affeet her choice and how

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