In: Finance
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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)?
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