PLEASE SHOW IN EXCEL You purchase a $325,000 town home and you pay 25 percent down....

PLEASE SHOW IN EXCEL

You purchase a $325,000 town home and you pay 25 percent down. You obtain a 30-year fixed-rate mortgage with an annual interest rate of 5.75 percent and monthly payments. After five years you refinance the mortgage for 25 years at a 5.1 percent annual interest rate. After you refinance, what is the new monthly payment (to the nearest dollar)?

Solutions

Expert Solution

We calculate the monthly payments using the function PMT in excel

Before refinance
Cost of the home	325000
Downpayment	81250
Loan amount	243750
Annual interest rate	5.75%
Number of years	30
Monthly payment for 5 years	$1,422.46
Loan amount remaining after 5 years	$226,107.83

After refinance
Annual interest rate	5.10%
Number of years	25
Loan amount at the start of refinance	$226,107.83
Monthly payments	$1,335.01

New monthly payment = $1335

jeff jeffy answered 1 year ago

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