Question

Consider a 20-year mortgage for $213,642 at an annual interest rate of 4.5%. After 9 years,...

Consider a 20-year mortgage for $213,642 at an annual interest rate of 4.5%. After 9 years, the mortgage is refinanced to an annual interest rate of 2.9%. What are the monthly payments after refinancing?

Homework Answers

Answer #1

$ 1,244.61

Step-1-:Existing Monthly Payment
Monthly Payment =-pmt(rate,nper,pv,fv)
= $ 1,351.60
Where,
rate = 4.5%/12 = 0.00375
nper = 20*12 = 240
pv = $   2,13,642
fv = 0
Step-2:Loan Balance after 9 years
Loan Balance =pv(rate,nper,pmt,fv)
= $ 1,40,518.05
Where,
rate = 4.5%/12 = 0.00375
nper = 11*12 = 132
pmt = $ -1,351.60
fv = 0
Step-3-:Revised Monthly Payment
Monthly Payment =-pmt(rate,nper,pv,fv)
= $ 1,244.61
Where,
rate = 2.9%/12 = 0.00241667
nper = 11*12 = 132
pv = $   1,40,518
fv = 0
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