Question

suppose that 10 years ago you bought a home for 120,000, paying 10% as a down payment, and financing the rest at 9% interest for 30 years.

this year (10 years after you first took at the loan) you check your loan balance. only part of your payments have been going to pay fown the loan; the rest has been going towards interest. you see that you still have 96,584 left to pay on your loan. your house is now valued at 170,000.

Refinancing: since interest rates have dropped, you consider refinancing your mortgage at a lower 6% rate. notice if you refinance you are fojng to be making payment on yor home for abother 30 years. in addition in the 10 years youve already been paying, thats 40 years total.

how much will you save each month because of the lower montly payment?

how much total interest will you be paying ? (consider the interest yoh paid over the first 10 years of your original loan as well as interest on your refinanced loan)

Answer 1