Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You have been living in the house you bought 9 years ago for $400,000. At that time, you took out a loan for 80% of

You have been living in the house you bought 9 years ago for $400,000. At that time, you took out a loan for 80% of the house at a fixed rate 20-year loan at an annual stated rate of 7.5%. You have just paid off the 108th monthly payment. Interest rates have meanwhile dropped steadily to 4.5% per year, and you think it is finally time to refinance the remaining balance over the residual loan life. There is no prepayment penalty on the mortgage balance of the original loan, but other closing costs will be $4,000. How much will you save in payments each month if you refinance?

Step by Step Solution

3.37 Rating (172 Votes )

There are 3 Steps involved in it

Step: 1

The original loan amount was 80 400000 320000 After 9 years you ... 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

Management Accounting

Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu

6th Canadian edition

013257084X, 1846589207, 978-0132570848

More Books

Students also viewed these Finance questions

Question

What is the role of reward and punishment in learning?

Answered: 1 week ago

Question

Briefly describe each of the seven basic quality' tools.

Answered: 1 week ago