9. A couple took out a $399,000.00 mortgage ten years ago. The original terms ca

Question

9. A couple took out a $399,000.00 mortgage ten years ago. The original terms called for 30 years of monthly payments at a 6.24% 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 3.12% APR with monthly compounding. The mortgage will call for monthly payments. What is the new monthly payment if the couple refinances

10. A couple took out a $399,000.00 mortgage ten years ago. The original terms called for 30 years of monthly payments at a 6.24% 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 3.12% APR with monthly compounding. The mortgage will call for monthly payments. How much will the couple save on monthly payments?

Explanation / Answer

Note: The solution is done using Financial calculator.

Q-9)

Calculation of monthy installments:

PV --> 399000

I/Y --> 0.52

N--> 360

CPT --> PMT

Monthly Installment = $2454.12

Calculation of Amount outstanding after 10 years, which is also the amount of new loan:

PMT--> $2454.12

N--> 240

I/Y --> 0.52

CPT --> PV

Amount of loan Outstanding or Amount of new Loan = $336021.14

Calculation of monthly Payments of new Loan:

PV --> $336021.14

N--> 360

I/Y --> 0.26

CPT --> PMT

Amount of Monthly Installment of New Loan = $1438.52

Q-10)

All calculations of above solution is also applicable in this solution

Monthly Savings for the next 20 years = ( 2454.12 - 1438.52) = $ 1015.60

Extra payments per month for further 10 years after the next 20 years = $ 1438.52

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