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 1 year ago

Assume you have an adjustable rate mortgage with interest rates of 6% for year 1, 7%...

Assume you have an adjustable rate mortgage with interest rates of 6% for year 1, 7% for year 2, 5% for year 3 and 4% for the remaining years of a 10 year mortgage. What is the rate of return if the original mortgage at time 0 is $700,000 and payments are made annually?

Answer the following questions a. Why is refinancing at a lower interest rate or paying off...

Answer the following questions a. Why is refinancing at a lower interest rate or paying off a mortgage costly for mortgage traders? b. How did bond traders make money? c. explain the beginnings of the mortgage market to what you know about the meltdown that happened in 2008.

You have obtained a mortgage for $100,000 with annual interest rate of 6% that is to...

You have obtained a mortgage for $100,000 with annual interest rate of 6% that is to be paid over 30 years (interest is compounded monthly). Your monthly payment is $600. Complete the first few rows of the loan amortization table (show how you got the number): Months Loan balance Loan payment Interest Principal 1 2 3

You currently have a 30-year fixed rate mortgage with an annual interest rate of 6%. You...

You currently have a 30-year fixed rate mortgage with an annual interest rate of 6%. You have had the mortgage 4 years, and on September 1, 2015 you made your 48th payment. The original principal amount was $280,000 and you monthly payment, without taxes and insurance, are $1,678.74 per month, computed using the Excel function =PMT(0.5%,360,280000,0,0). Starting with your original mortgage your banker calls and says that you could refinance your existing mortgage (6% rate, 30-year original term) into a...

1. Jacqueline and Keith Sommers are considering the implications of refinancing their 30-year mortgage (interest rate...

1. Jacqueline and Keith Sommers are considering the implications of refinancing their 30-year mortgage (interest rate = 7.25%) that they purchased 5 years ago at $300,000 (20% down payment and 80% mortgage loan monthly payment). Now after 5 years (60 monthly payments) the balance of loan has been reduced to $226,509.07. Rates have declined considerably, and a major refinancing frenzy is underway. They are trying to determine whether they should go in for a 15-year mortgage at 2.75% per year...

32. Mortgage rates: Following are interest rates (annual percentage rates) for a 30-year fixed rate mortgage...

32. Mortgage rates: Following are interest rates (annual percentage rates) for a 30-year fixed rate mortgage from a sample of lenders in Macon, Georgia on a recent day. It is reasonable to assume that the population is approximately normal. 4.750 4.375 4.176 4.679 4.426 4.227 4.125 4.250 3.950 4.191 4.299 4.415 a. Construct a 99% confidence interval for the mean rate. b. One week earlier, the mean rate was 4.050%. A mortgage broker claims that the mean rate is now...

Mortgage interest rates and home prices 30-year mortgage rates year interest rate (%) Median home price...

Mortgage interest rates and home prices 30-year mortgage rates year interest rate (%) Median home price 1988 10.30 183,800 1989 10.30 183,200 1990 10.10 176,900 1991 9.30 173,500 1992 8.40 172,900 1993 7.30 173,200 1994 8.40 173,200 1995 7.90 169,700 1996 7.60 174,500 1997 7.60 177,900 1998 6.90 188,100 1999 7.40 203,200 2000 8.10 230,200 2001 7.00 258,200 2002 6.50 309,800 2003 5.50 329,800 1. Generate two separate scatter plots, following the requirements below, with the data provide. a. year...

Ali and sarah plan to refinance their mortgage to obtain a lower interest now that rates...

Ali and sarah plan to refinance their mortgage to obtain a lower interest now that rates have dropped 2-3 percentage points. A ‘refinance’ will reduce their mortgage by $110 a month with a new interest rate. Their closing costs for refinancing the loan will be $1700. How long will it take them to cover the cost of refinancing? They will move to another state in three years when Savannah retires. Should they refinance?

You are refinancing your current mortgage with an outstandingloan balance of $280,000 today. The new...

You are refinancing your current mortgage with an outstanding loan balance of $280,000 today. The new loan has 3.9% APR interest rate (compounded monthly) and it requires you to make a monthly payment for the next 30 years. What is your monthly payment under this new loan? Please show your excel formula in your answer and explain step-by-step calculation to arrive to your answer.

loan refinancing is a typical option if there are changes in interest rates in the market....

loan refinancing is a typical option if there are changes in interest rates in the market. your company has just completed its 4th year payment of 100,000,000 10 year loan. The existing loan has an interest rate of 8% compounded semi-annually and has a uniform semi-annual payment as well. now, the market interest rate is 6% and you have opportunity to expand further requiring another 50,000,000 loan payable for 10 years. you also want to refinance the remaining part of...

Question