Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose that you are currently making monthly payments on a $185,000 30-year mortgage at 5.77% interest compounded monthly. For the last 6 years, you have

image text in transcribed

Suppose that you are currently making monthly payments on a $185,000 30-year mortgage at 5.77% interest compounded monthly. For the last 6 years, you have been paying the regular monthly payments. You now have the option to refinance your current mortgage with a new 30- year mortgage that has an interest rate of 4.88% compounded monthly. Note that the lender of the new loan has a closing cost fee of $1,250 (for title insurance, home appraisal costs, etc.) for the new (refinanced) mortgage. The lender stipulates that closing cost must be paid in cash and cannot be part of the new loan. You are to determine whether you would save or lose money in interest if you were to refinance your home. Take the closing costs into account when determining if you would save or lose money. Suppose that you are currently making monthly payments on a $185,000 30-year mortgage at 5.77% interest compounded monthly. For the last 6 years, you have been paying the regular monthly payments. You now have the option to refinance your current mortgage with a new 30- year mortgage that has an interest rate of 4.88% compounded monthly. Note that the lender of the new loan has a closing cost fee of $1,250 (for title insurance, home appraisal costs, etc.) for the new (refinanced) mortgage. The lender stipulates that closing cost must be paid in cash and cannot be part of the new loan. You are to determine whether you would save or lose money in interest if you were to refinance your home. Take the closing costs into account when determining if you would save or lose money

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

Personal Finance

Authors: Jack Kapoor

12th Edition

125996776X, 9781259967764

More Books

Students also viewed these Finance questions