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Suppose that your neighbour took the loan of $300,000 5 years ago. At that time, she took 30 year loan for 5.8%. She now wishes to regard as refinancing her loan. She went to bank and was told that refinancing her loan for 30 years would cost her $6500 direct and re financing her loan for 15 years would cost her $5000 direct. Your neighbour is low on cash and would favour to add upfront fees into her latest loan. Your neighbour comes to look for your help with her mortgage dilemma.

Can you utilize your Time Value of Money ability to aid show your neighbour if she must go for refinancing? You can guide her in terms of helping her know her present interest expense against future interest expense, present PMT against future PMT, how 15 year loan against a 30year loan would influence her finances, and so on. Assist her understand by giving her various situations so she can make good decision which suits her best. You can get present rates from any bank website by looking for under Mortgage Rates.

Give your work  by using tables/graphs/explanations.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M914054

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