Pick one of these options for each of the people below. Explain why that plan is good for that person, including how much money they will save over the entire time of the loan. Show the math!

This is not an excel question. So please solve it on plain paper or MS word with step by step explanations and formula used

The original mortgage was 30 years at 7.5% compounded monthly, for 600,000. It was taken 4 years ago.

OPTIONS:

Option 1

Refinance:

Change to 15 years at 6.8% compounded monthly.

Option 2

Refinance:

For 30 years at 7.1% compounded monthly. , reducing the monthly payment.

Option 3

Refinance:

For 30 years at 7.1% compounded monthly, keeping the payment the same, and getting a large amount of cash which is included in the $ financed by the new mortgage, along with the amount still owed on the house.

Option 4

Dont refinance.

Choose 1 of the above options for each of the following people: (attach the math computations)

Person 1

Her husband lost his job, so there is less money coming into the household each month.

Option _____________

Why? _____________

New payments ________

$ saved over the life of the loan ( including $ already paid ) _____________

Person 2

This couple has a large monthly income, and plan to retire in about 10 years.

Option _____________

Why? _____________

New payments ________

$ saved over the life of the loan ( including $ already paid ) _____________

Person 3

This couple has a strong income and wants to add on another bedroom and another bathroom to their house.

Option _____________

Why? _____________

New payments ________

$ saved over the life of the loan ( including $ already paid ) _____________