Since interest rates have dropped, you consider refinancing your mortgage at a lower 6% rate. If...

Since interest rates have dropped, you consider refinancing your mortgage at a lower 6% rate. If you took out a new 30 year mortgage at 6% for your remaining loan balance your new monthly payments would be $675.58. House was $140,000 paying10% as down payment (14000) and 9% interest for the next 30 years

a. how much interest will you pay over the life of the new loan?

b. notice that if you refinance your house you are going to be making payments for an additional 30 years on top of the 10 youve already been paying. How much will you save each month because of the lower monthly payment?

c. how much total interest will you be paying?

( conside the 9% interest paid on the first 10 years of your original $126,000 loan)

Expert Solution

(a ): Interest over the life of the new loan= $130,528.18

(b ): Money saved each month due to lower monthly payments= $338.24

(c ): Total interest paying on both loans together= $238,868.60

Calculation as below:

jeff jeffy answered 2 years ago

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