Crystal Ball has a 30 year, fully amortizing fixed rate mortgage, with monthly payments, for a...

Crystal Ball has a 30 year, fully amortizing fixed rate mortgage, with monthly payments, for a $200,000 loan at 7%. In 5 years, interest rates fall and Crystal can get a 25 year, fully amortizing fix rate mortgage with monthly payments at 6%. However, to get this new loan, Crystal needs to pay 2 points and $2,500 in fees. What is the return on investment (from refinancing)? Assume Crystal stays in the property for the next 25 years – the duration of the loan.

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jeff jeffy answered 2 years ago

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