Please help solve this in Excel and please show all the steps and formulas to solve this step by step in Excel. Please use the following information to answer a. through f. Five years ago, Nick purchased a house of $500,000. Nick borrows a mortgage with 80% of LTV (loan to value ratio), monthly payments and the interest rate of 5% for 30 years. Nick found a new lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 3.5% with monthly payments for 30 years. Suppose that the new lender will charge 3.5 discount points on the new loan and other refinancing costs will equal $2,000. a. What is the monthly payment for the current loan? b. What is the current outstanding loan balance? c. What is the new loan amount if Nick chooses to refinance? d. What is Nick's monthly payment for the new loan? e. What is the effective cost of the new loan if Nick holds the loan for 30 years? Should Nick refinance? f. If Nick wants to refinance today, at least how many years should he stay in the house (do not prepay)? Please explain Why?
Please help solve this in Excel and please show all the steps and formulas to solve this step by step in Excel.
Please use the following information to answer a. through f. Five years ago, Nick purchased a house of $500,000. Nick borrows a mortgage with 80% of LTV (loan to value ratio), monthly payments and the interest rate of 5% for 30 years. Nick found a new lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 3.5% with monthly payments for 30 years. Suppose that the new lender will charge 3.5 discount points on the new loan and other refinancing costs will equal $2,000.
a. What is the monthly payment for the current loan?
b. What is the current outstanding loan balance?
c. What is the new loan amount if Nick chooses to refinance?
d. What is Nick's monthly payment for the new loan?
e. What is the effective cost of the new loan if Nick holds the loan for 30 years? Should Nick refinance?
f. If Nick wants to refinance today, at least how many years should he stay in the house (do not prepay)? Please explain Why?
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