A couple took out a $354,000.00 mortgage ten years ago. The original terms calle

Question

A couple took out a $354,000.00 mortgage ten years ago. The original terms called for 30 years of monthly payments at a 6.60% APR. The couple has made all payments over the last 10 years. Currently, the couple is considering re-financing their mortgage.

The couple has been offered a chance to re-finance their mortgage balance. The new mortgage will be for 30 years at the lower rate of 4.68% APR with monthly compounding. The mortgage will call for monthly payments.

What is the current balance on their existing mortgage?

Explanation / Answer

Current balance on the existing mortgage can be calculated using CUMPRINC function in excel

Principal paid over the last ten years = CUMPRINC( rate = 6.6%/12, nper = 30*12, pv = 354000, 1, 120, 0)

= $53,143.55

Current balance = 354,000 - 53,143.55 = $300,856.45

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