Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The mortgage on your house is 5 5 years old. It required monthly payments of $ 1 comma 4 0 2 1 , 4 0

The mortgage on your house is 55 years old. It required monthly payments of $1 comma 4021,402, had an original term of 3030years, and had an interest rate of 10%10%(APR). In the intervening 55years, interest rates have fallen and so you have decided to refinancelong dashthat is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a 3030-year term, requires monthly payments, and has an interest rate of 6.625%6.625%(APR).
a. What monthly repayments will be required with the new loan?
b. If you still want to pay off the mortgage in 2525years, what monthly payment should you make after you refinance?
c. Suppose you are willing to continue making monthly payments of $1 comma 4021,402. How long will it take you to pay off the mortgage after refinancing?
d. Suppose you are willing to continue making monthly payments of $1 comma 4021,402 and want to pay off the mortgage in 2525 years. How much additional cash can you borrow today as part of the refinancing?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

More Books

Students also viewed these Finance questions