Question
You purchase a new house for $200,000 with a 5% down payment. You obtain a 30-year loan at 5% compounded monthly and will make monthly
You purchase a new house for $200,000 with a 5% down payment. You obtain a 30-year loan at 5% compounded monthly and will make monthly payments on the loan. Closing costs are $1,500. PMI is $150 per month for the first 5 years. Taxes are estimated to be $1,800 per year. Insurance will be $1,500 per year.
Now, after 5 years, you have the option to refinance to a new interest rate of 4% compounded monthly. You plan to sell the house in 5 years (10 years after you bought it.) What is the most you would be willing to pay now to obtain the new interest rate of 4%? Assume your monthly MARR is 10%/12 = .8333%
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