Please help solve this and please show all the steps to solve this step by step in Excel. Two years ago, Martin purchased a house for $100,000. Martin borrowed a mortgage with 80% of LTV (loan to value ratio). The interest rate on the mortgage is 6%.  Payment terms are being made monthly to amortize the loan over 30 years. Martin has found another lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 4.5% with monthly payments for 30 years. Suppose that the new lender will charge three discount points on the new loan and other refinancing costs will equal $3,000.    What is the new loan amount if you choose to refinance? What is Martin's monthly payment for the new loan? What is the effective cost of Martin's new loan and do you refinance if he holds the loan for 30 years?

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Cost of Credit

The cost of credit is an extra amount that the borrower has to pay besides the loan amount. These credit charges may vary from loan to loan. The cost of credit includes interest charges, maintenance charges, and arrangement charges. Some of the costs are mandatorily collected by the lender based on the loan amount and tenure of the loan. The cost of credit is also called finance charges of the credit.