Suppose that Frank has hired you to determine whether he should refinance his mo

Question

Suppose that Frank has hired you to determine whether he should refinance his mortgage. Frank has a $100,000 30-year mortgage at 5% interest compounded monthly. For the last 10 years, Frank has been paying the regular monthly payments. Frank now has the option to refinance his mortgage with a new 25-year mortgage that has an interest rate of 4.5% interest compounded monthly. Note the lender of the new loan has a $2,000 fee (for closing costs and home appraisal cost. for the new (refinanced) mortgage. Should Frank refinance his house? Show all steps.

Explanation / Answer

Barnett "Barney" Frank (born March 31, 1940) is the U.S. Representative for Massachusetts's 4th congressional district since January 1981. A member of the Democratic Party, he is the former chairman of the House Financial Services Committee (2007–2011) and is considered the most prominent gay politician in the United States. Born and raised in Bayonne, NJ, Frank graduated from Harvard College and Harvard Law School. He worked as a political aide before winning election to the Massachusetts House of Representatives in 1972. He was elected to the U.S. House of Representatives in 1980 with 52 percent of the vote. He has been re-elected every year since by wide margins. In 1987, he came out as gay, becoming the first member of Congress to do so voluntarily. From 2007 to 2011, Frank served as chairman of the House Financial Services Committee, where he remains the ranking Democrat. On November 28, 2011, Frank announced that he would retire from the Congress at the conclusion of his term in 2013.On July 7, 2012, Frank married his long-time partner, James Ready, becoming the first member of Congress to marry someone of the same sex while in office.

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