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You have been living in the house you bought 10 years ago for $500,000. At that time, you took out a loan for 80% of the house at a fixed rate 30-year loan at an annual stated rate of 6%. You have just paid off the 120th monthly payment. Interest rates have meanwhile dropped steadily to 5.50% per year, and you think it is finally time to refinance the remaining balance. But there is a catch. The total fee to refinance your loan is $15,000, when you include all the various costs of refinancing. Should you refinance the remaining balance for the remaining 20 years? How much would you save/lose if you decided to refinance?
@wolf1728 if you answer first, then that ain't fair! XD! I'm kidding. Just answer your question or I mean the question.
Well, here's a start:
the mortgage is for $400,000 30 years at 6.0% YEARLY interest
monthly rate = .06/12 = .005
The loan payment formula is
Monthly payment = [rate+ (rate/((1+rate^months)-1)] * principal
Monthly payment = [0.005+(0.005/((1.005^360)-1)] * principal
Monthly payment = [0.005+(.005/5.02257521226299)]*400,000
Monthly payment = (0.005+ 0.00099550525152756900) * 400,000)
Monthly payment = 0.0059955053 * 400,000
Monthly payment = 2,398.20212which rounds to
Monthly payment = 2,398.20
WOW - well at least you have the monthly payment.
I'll leave the rest to somebody else.