Theres a 30yr home loan for $100,000 at 7%. After 15 years the loan is payed off

Question

Theres a 30yr home loan for $100,000 at 7%. After 15 years the loan is payed off in order to refinance at a lower rate. The loan has a prepayment penalty of six months interest of 80% of the remaining balance of the loan.

a) How much is the remaining balance of the loan?
b) If the loan can be refinanced with a 15yr loan at 6% with no other costs, then should it be done?
c) If the loan can be refinanced over 15 yrs with no other costs, then what interest rate would make it worthwhile?

I think i have an idea on what to do, although I am not entirely sure on this. Please show your work. Thanks.

Explanation / Answer

50 dollars

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