A property was financed 5 years ago at 80% of 360,000 and an APR of 3%....

A property was financed 5 years ago at 80% of 360,000 and an APR of 3%. Five years have passed and interest rates have dropped to an APR of 2.65% for a five year mortgage. Required fees for the new mortgage are $1,400. What is the effective cost to refinance the mortgage?

A. 2.72%

B. 2.96%

C. 3.02%

D. 3.07%

Solutions

Expert Solution

As per the question under new finance scheme you have to pay 2.65% APR for refinancing.

Loan Amount is (360000*80%): $288000.

Initial loan amount received net of fees: 288000-1400=286600

So Annual Interest required to be paid is $7632 (288000*2.65%).

jeff jeffy answered 1 year ago

Next > < Previous

Related Solutions

Assume that 25 years ago your dad invested $360,000, plus $38,000 in years 2 through 5,...

Assume that 25 years ago your dad invested $360,000, plus $38,000 in years 2 through 5, and $50,000 per year from year 6 on. At a very good interest rate of 13% per year, determine the CC value. The CC value is determined to be $ .

Tom Miller owns a house that he bought 5 years ago for $200,000. He financed the...

Tom Miller owns a house that he bought 5 years ago for $200,000. He financed the purchase with an 80% LTV loan at 7% interest and a 30-year amortization term with monthly payments. Interest rates have since fallen and a new loan (which is equal to the balance of the original loan) is now available at 5.25% interest rate with 4 discount points and is amortized over 25 years with monthly payments. Neither mortgage requires a prepayment penalty. Assume that...

You borrowed $10,000 two years ago. The loan terms are: 5-year loan with APR of 12%...

You borrowed $10,000 two years ago. The loan terms are: 5-year loan with APR of 12% and with monthly payments of $222.44. Today, you decided you want to pay off the loan in 20 months rather than the remaining life of the loan. How much more do you have to add to your monthly payment in order to accomplish it? Write out your answer in the space provided. MAKE SURE TO SHOW HOW YOU OBTAIN THE ANSWER (STEPS NECESSARY). If...

You borrowed $10,000 two years ago. The loan terms are: 5-year loan with APR of 25%...

You borrowed $10,000 two years ago. The loan terms are: 5-year loan with APR of 25% compounded monthly. 1. What is the monthly payment for the loan? 2. What is the loan balance today? 3. Today, you decide to pay off the loan in 20 months rather than the remaining life of the loan. How much more do you have to add to your monthly payment in order to accomplish the goal? Please include Excel formulas.

An investor bought a property 3 years ago for Sh, 500,000 of which 20% was cost...

An investor bought a property 3 years ago for Sh, 500,000 of which 20% was cost of land. The building is depreciated on a straight-line basis over 20 years. The property can be sold today for Sh. 800,000. The loan outstanding today is Sh. 280,000. The capital gain tax on price appreciation is 20% and 25% on depreciation recapture.Calculate the after tax cash flow from the sale of the property.

ABC Company purchased $50484 of equipment 5 years ago. The equipment is 7-year MACRS property. The...

ABC Company purchased $50484 of equipment 5 years ago. The equipment is 7-year MACRS property. The firm is selling this equipment today for $8128. What is the After-tax Salvage Value if the tax rate is 35 percent? The MACRS allowance percentages are as follows, commencing with year one: 14.29, 24.49, 17.49, 12.49, 8.93, 8.92, 8.93, and 4.46 percent. Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if...

Home: $180,000 with $40,000 down payment. Financed for 20 years at 6% APR. Create loan amortization...

Home: $180,000 with $40,000 down payment. Financed for 20 years at 6% APR. Create loan amortization schedule in excel for constant payment method. Rework with an extra $40 in principal Create a loan amortization schedule in excel for constant amortization method.

Larry purchased a house 10 years ago. The house cost $450.000 and the bank financed the...

Larry purchased a house 10 years ago. The house cost $450.000 and the bank financed the loan at 4% interest for 30 years with monthly payments. Larry wants to sell the house. How much does he still owe on the house?

You can buy property today for $3 million and sell it in 5 years for $4...

You can buy property today for $3 million and sell it in 5 years for $4 million. (You earn no rental income on the property.) a. If the interest rate is 8%, what is the present value of the sales price? (Do not round intermediate calculations. Enter your answer in millions rounded to 3 decimal places.) b. Is the property investment attractive to you? c-1. What is the present value of the future cash flows, if you also could earn...

10-years ago, you took out a 30-year mortgage with an APR of 6.5% for $430,000. If...

10-years ago, you took out a 30-year mortgage with an APR of 6.5% for $430,000. If you were to refinance the mortgage today for 20 years at an APR of 4.25%, how much would your monthly payment change by? Please explain how to solve step-by-step

Subjects