You have just purchased a house and have obtained a 30-year, $200,000 mortgage with an interest rate of 10%. b. Assuming you bought the house on January 1, what is the principal balance after one year? After 10 years? is it: after 1 year = $190,942 and after 10 years = $90,580 c. After four years, mortgage rates drop to 8% for 30-year fixed-rate mortgages. You still have the old 10% mortgage you singed four years ago and you plan to live in the house for another five years. The total cost to refinance the mortgage is $3,000 including legal fees, closing costs, and points. The rate on a 5-year CD is 6%. Should you refinance your mortgage or invest the $3,000 in a CD? The 6% CD rate is your opportunity cost of capital.