You have been in your home for about four and a half years and your current monthly mortgage payment is $1,024.50. When you bought the home, it cost $293.000. YOU put $50,000 down and financed $243,000 with a 30 year foxed rate mortgage at 3% annual interest rate. Your home has appreciated in value considerably and you are considering refinancing to access some of that equity, perhaps to use for the car. Your credit rating qualifies you for a 2.85% interest rate with zero closing costs for a standard Own & Re-Finance A House 30 year mortgage Part A- Current Situation: Let's do a quick overview of your current mortgage. I've done some of the work for you by giving you the monthly payment! Find the total cost of loan on your home if you kept the current loan a. b. How much interest would you pay over the life of this loan You contact the bank and they inform you that after making exactly 53 payments, your balance on the loan is $219,400. c. 23,600 How much have you paid down on your principal (not a trick question!) Find the total amount of payments to the bank. (not a trick question!) How much interest have you paid on the loan so far? (Hint: use the answe to parts c and d to determine this!) AB-Amount you can Finance: Use the Initial Value Formula for these calculations. option P: You are adamant about keeping your some monthly payment. a. Find the amount you can finance under the new terms. b. Find the total cost of this loan (hint, this is an easy onell How much were you able to "cash out" by refinancing (This is the amount you can borrow minus the outstanding loan balance.) Option Q: If you are pre-qualified for up to $1250/mo. a. Find the maximum you can finance under the new terms. b. Find the total cost of this loan (hint, this is an easy one!) C. How much were you able to "cash out" by refinancing? (This is the amount you can borrow minus the outstanding loan balance.) BONUS Should I Finance my Car by Refinancing My House? Your current loan balance is $219.400 after making 53 payments of $1,024.50. with your current mortgage, the total cost of your home loan was ucap: You have payments remaining for a total of (W) "W" is the total remaining cost of your home it you pay out the existing mortgage. If you are going to pay for your car from proceeds of "cashing out" by refinancing your home. you will be paying the full $32,000 for the car. Let's then assume that you can get $2500" for a private party sale of your used car so that you need to "cash out" only $29.500 to properly compare to the dealer financing scenarios. (this may seem low, but trade ins are often wel over for market value for such sales ... not to be confused with for market value of the car if you were going to purchase from a dealer with The assurances, financing etc. that go with those sales.) You need finance $219,400 + $29.500 = $248.900 a. Your monthly payment for 30 year loan at 2.85% for this amount will be $ b. The total cost of the new loan is: C. Find the difference between (W) above and part "b". This is ultimately the cost of your car however you partition it or regardless of payments. Cost of your car through refinance: (Z) I. For the foreseeable future (
