Fifteen years ago Dan bought a home and financed $150,000 with a 30-years mortgage at 8.2%.
(a) find his monthly payment, the total amount of his payments, and the total amount of interest he will pay over the life of this loan.
(b) Dan made payments for 15 years. Estimate the unpaid balance using the formula and then calculate the total of their remaining payments. y=R*(1-(1+i)^(-n+x))/(i).
(c) Suppose interest rates have dropped since Dan took out his loan. One bank now offers a 30-year mortgage at 6.5%. Their fee for financing is $3,400. If Dan pay this fee up front and refinance the balance of their loan, find his monthly payment. Including the refinancing fee, what is the total amount of his payments? Discuss whether or not Dan should refinance with this option?
A different bank offers the same 6.5% rate but on a 15-year mortgage. Their fee for financing is $4500. If Dan pay this fee up front and refinance the balance of his loan, find their monthly payment. Including refinancing fee what is the total amount of his payments? Discuss whether or not Dan should refinance with this option?
(a) Monthly payment:
(b) Unpaid balance after 15 years (15 * 12 = 180 payments):
(c) First option: Refinance the unpaid balance of $115,962.66 at 6.5% for 30 years, while paying the refinancing fee of $3,400 up front.