Question
Your mortgage loan has an outstanding principal balance of $154,914 and 240 months remaining until maturity when it will be paid in full. You are
Your mortgage loan has an outstanding principal balance of $154,914 and 240 months remaining until maturity when it will be paid in full. You are considering whether to refinance the existing balance at 3.25%. You want to keep the maturity the same, so a new (refinance) mortgage loan would have a 240-month loan term. Your existing mortgage loan requires monthly payments of $959.28. Assuming the mortgage lender charges an origination fee of $2,500, would it be economical for you to consider the refinance opportunity and what do you estimate for the annual effective cost of refinancing?
Answer Choices:
Yes and 3.43%
Yes and 3.25%
No and 4.44%
No and 4.25%
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