Y5 When you purchased your home, you took out a fully amortizing mortgage for $350,000 with a
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Question:
Y5
When you purchased your home, you took out a fully amortizing mortgage for $350,000 with a 4.75% rate for a 30-year term and a monthly payment of $1,825.77. After 10 years, you have a chance to refinance for the remaining 20 years with a rate of 3.75% and a payment of $1,675.08, fully amortizing over the remaining 20 years; however, you have to pay $5,000 in up front costs for the new loan. Based on the up front costs and how much you will be saving per month over the life of the new loan, what is the effective annualized return (RATE calc in Excel) on the $5,000 fee paid?
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