Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a 5.6% interest rate. The mortgage is a 30 year mortgage with monthly payments. Today you can refinance the loan at a 5% interest rate for a fee of $10,000. Assume that you would borrow just enough to repay the old loan and the refinancing fee. Monthly Payments Annual Rate Life (In Years) Loan Amount Periods Paid Fee 30 $400,000.00 Initial Loan Refinancing 84 $ 0 $10,000.00 5.6% 5.0% 30 If you refinance at the new rate, how much will you save per month? Monthly Savings If you expect to move in 6 years, would you want to refinance? Years Months Time Till Move 6. 72 Old Loan New Loan Loan Balance at Move NPV of Refinancing Refinance?
Suppose you purchased a house 7 years ago and took out a mortgage for $400,000 with a 5.6% interest rate. The mortgage is a 30 year mortgage with monthly payments. Today you can refinance the loan at a 5% interest rate for a fee of $10,000. Assume that you would borrow just enough to repay the old loan and the refinancing fee. Monthly Payments Annual Rate Life (In Years) Loan Amount Periods Paid Fee 30 $400,000.00 Initial Loan Refinancing 84 $ 0 $10,000.00 5.6% 5.0% 30 If you refinance at the new rate, how much will you save per month? Monthly Savings If you expect to move in 6 years, would you want to refinance? Years Months Time Till Move 6. 72 Old Loan New Loan Loan Balance at Move NPV of Refinancing Refinance?
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter22: Providing And Obtaining Credit
Section: Chapter Questions
Problem 2P: Cost of Bank Loan Mary Jones recently obtained an equipment loan from a local bank. The loan is for...
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