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The mortgage on your house is five years old. It required monthly payments of $1,308, had...
The mortgage on your house is five years old. It required monthly payments of $1,308, had an original term of 30 years, and had an interest rate of 10% APR (compounded monthly). In the intervening five years, interest rates have fallen and so you have decided to refinance—that is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a 30-year term, requires monthly payments, and has an interest rate of 6.375
(a) What monthly repayments (in $) will be required with the new loan? Round your answer to the nearest cent. (Hint: To answer this part, you need to first solve for outstanding balance on the current mortgage. If you cannot do so, make up a reasonable number, say $125,000, for the outstanding balance and solve this question)
(b) Suppose you are willing to continue making monthly payments of $1,308. How long (in months) will it take you to pay off the mortgage after refinancing? (Round your answer to the nearest integer.)
(c) Suppose you are willing to continue making monthly payments of $1,308, and want to pay off the mortgage in 25 years. How much additional cash (in $) can you borrow today as part of the refinancing? (Round your answer to the nearest dollar.
(show work)
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jeff jeffy answered 2 years agoRelated Solutions
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