1. A borrower has secured a 30 year, $110,000 loan at 8%. Fifteen years later, the borrower...

1. A borrower has secured a 30 year, $110,000 loan at 8%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 7%. However, the up-front fees, which will be paid in cash, are $3,000.

What is the monthly payment on the initial loan?
What is the loan balance and the new monthly payment at the time of refinancing?
What is the return on investment if the borrower expects to remain in the home for the next fifteen years after refinancing?
Suppose you can earn a risk-free return of 3% on your $3,000 at the time of refinancing. Would the refinancing be a sensible choice?

Does anyone know how to solve these four problems with the details?

Expert Solution

jeff jeffy answered 3 years ago

7. A borrower has secured a 30 year, $100,000 loan at 8%. Fifteen years later, the...

7. A borrower has secured a 30 year, $100,000 loan at 8%. Fifteen years later, the borrower has the opportunity to refinance with a fifteen year mortgage at 7%. However, the up-front fees, which will be paid in cash, are $2,000. What is the monthly payment on the initial loan? What is the loan balance at the time of refinancing? What is the return on investment if the borrower expects to remain in the home for the next fifteen years...

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A borrower has secured a 30 year, $320,000 loan at 7%. Ten years later, the borrower has the opportunity to refinance with a 20 year mortgage at 6.2%. However, there is an upfront fee of $2500, which will be pain in cash. what is the return on investment (refinance) if the borrower expects to remain in the home for the next 5 years?

A borrower has secured a 25-year, $340,000 loan at 12% with monthly payments. Ten years later,...

A borrower has secured a 25-year, $340,000 loan at 12% with monthly payments. Ten years later, the borrower has an opportunity to refinance with a 15-year mortgage at 10%. However, the up-front fees which will be paid in cash, are equal to $6,400. What is the return on investment (refinancing) if the borrower expects to remain in the home for the next 15 years?

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A borrower has a 30-year mortgage loan for $200,000 with an interest rate of 6% and monthly payments. If she wants to pay off the loan after 8 years, what would be the outstanding balance on the loan? (D) $84,886 $91,246 $146,667 $175,545 Not enough information Please explain me the step on financial calculator. The answer is D

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