DATA GIVEN FOR THE OLD LOAN AND THE NEW LOAN RUSH RUSH FINANCE ....PERSONAL Marg
ID: 2807940 • Letter: D
Question
DATA GIVEN FOR THE OLD LOAN AND THE NEW LOAN
RUSH RUSH FINANCE ....PERSONAL Marginal tax rate 6% Resale Plan (Months) 60 MORTGAGE TERMS Original Mortgage Amount $150,000.00 Current Mortgage Rate 5.75% Original Term (Years) 20 Months Paid 117 New Mortage Rate 3.00% New Term (YEARS) 15 Points 0 REFINACING FEES Application $200.00 Title $2,000.00 Legal $200.00 Other $10,779.85 Points 0 Total Fees $13,179.85 ANALYSIS CURRENT PROPOSED Mortgage Amount 97, 703.26 $97,703.26 ANALYSIS Mortgage Payment Months to Recover Refinancing cost Mortage Balance at Resale (Valor Presente del MA - c26 Principal Repaid to Resale ( - MA - MBAR = c26 c29) Total Payments to Resale Total Interest to Resale Tax Deduction on Interest Net Interest Costo to Resale Interest Savings (COSTS) TOTAL SAVINGS COST (COSTS)
COURSE : FINANCE: INCLUDED DATA FOR OLD LOAM AND NEW LOAN TO RECALCULATE MORTGAGE PAYMENTS ETC
PERSONAL MARGINAL TAX RATE 6% RESALE PLAN (MONTHS) 60Explanation / Answer
Soln :
Please refer the table, here we have calculated mortgage payment for new loan a sPMT (3%/12,180,-97703.26,0) = 674.72
Total payments to resale that is at 60 months = 674.72*60
Also, we have calculated the interest cost for 60 months for old loan adding interest of each month .
Use Excel to calculate PMT, principal paid, interest and principal remaining, you will get these values for both old and new loan
Interest of previous loan = 22636 and hence interest cost savings = 22636 - interest paid on new loan = 22636-11886 = 10749
Total savings cost = Interest savings - total fee = 10749 - 13180 = -2431
ANALYSIS For New loan MORTAGE AMOUNT 97703.26 MORTGAGE PAYMENT 674.72 MONTHS TO RECOVER REFINANCING COST 180 MORTGAGE BALANCE AT RESALE (PRESENT VALUE) 69865 PRINCIPAL REPAID TO RESALE 27838.26 TOTAL PAYMENTS TO RESALE 40483.2 TOTAL INTEREST TO RESALE 12644.94 TAX DEDUCTION ON INTEREST 758.70 NET INTEREST COST TO RESALE 11886.24 INTEREST SAVINGS (COST) 10749.76 TOTAL SAVINGS COST 13179.85Related Questions
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.