Question

The Croods family bought their $340,000 house 12 years ago with 5.28% APR on 30-year mortgage....

The Croods family bought their $340,000 house 12 years ago with 5.28% APR on 30-year mortgage. Now they want to refinance to take advantage of low interest rates. They got an offer for 3.72% APR on a 30-year mortgage. How much can they save on their monthly mortgage payments?

Question 7 options:

$139

$315

$158

$212

Homework Answers

Answer #1

Monthly payment @ 5.28%:

PV = -340000
Nper = 30 * 12 = 360
Rate = 5.28% / 12
FV = 0

Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(5.28%,360,-340000,0)
= $1,883.82

Monthly payment @ 3.72%:

PV = -340000
Nper = 30 * 12 = 360
Rate = 3.72% / 12
FV = 0

Monthly payment can be calculated by using the following excel formula:
=PMT(rate,nper,pv,fv)
=PMT(3.72%,360,-340000,0)
= $1,568.81

Monthly savings = $1,883.82 - $1,568.81 = $315

Monthly savings = $315

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
It’s been exactly five years since Mr. Smith bought his house with a 30-year mortgage which...
It’s been exactly five years since Mr. Smith bought his house with a 30-year mortgage which had an interest rate of 9.00% (APR, monthly compounding). The outstanding balance of the current mortgage is $178,799.01. In the intervening five years, interest rates have fallen and so Mr. Smith has decided to refinance the remaining balance on his current mortgage with a new 32-year mortgage which has monthly payments and an interest rate of 5.7% (APR, monthly compounding). How much would the...
1. Charlie bought his house 15 years ago, he is borrowed $200,000 with a 30-year mortgage...
1. Charlie bought his house 15 years ago, he is borrowed $200,000 with a 30-year mortgage with a 6.0% APR. His mortgage broker has offered him a 15-year mortgage with a 4¾% APR with 3 points closing costs. Should Charlie refinance if he plans to live in the house for 10 more years? 21. Suzie owns a municipal bond that pays 5% interest annually and her average tax rate is 23% and his marginal tax rate is 40%. What is...
You bought your house five years ago and you believe you will be in the house...
You bought your house five years ago and you believe you will be in the house only about five more years before it gets too small for your family. Your original home value when you bought it was $250,000, you paid 20 percent down, and you financed closing costs equal to 3 percent of the mortgage amount. The mortgage was a 30-year fixed-rate mortgage with a 6.5 percent annual interest rate. Rates on 30-year mortgages are now at 5 percent...
You have been living in the house you bought 7 years ago for $300,000. At that...
You have been living in the house you bought 7 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 15-year loan at an annual stated rate of 7.5%. You have just paid off the 84th monthly payment. Interest rates have meanwhile dropped steadily to 5.0% per year, and you think it is finally time to refinance the remaining balance over the residual loan life. But there is a...
Your family purchased a house three years ago. When you bought the house you financed it...
Your family purchased a house three years ago. When you bought the house you financed it with a $185,000 mortgage with an 8.2 percent nominal interest rate, with monthly payments. The mortgage was for 15 yearsWhat is the remaining balance on your mortgage today? What the PV of an ordinary annuity with 10 payments of \$66,450 If the appropriate Interest rate is 74 percent?
22. The Howe family recently bought a house. The house has a 15-year, $228,153.00 mortgage with...
22. The Howe family recently bought a house. The house has a 15-year, $228,153.00 mortgage with monthly payments and a nominal interest rate of 6%. What is the total dollar amount of principal the family will pay during the first 5 years of their mortgage? (Assume all payments are made at the end of the month)
Mr. and Mrs. Spirit purchased a $35,000 house 20 years ago. They took a 30-year mortgage...
Mr. and Mrs. Spirit purchased a $35,000 house 20 years ago. They took a 30-year mortgage for $30,000 at a 3% annual interest rate. Their bank, the First Amityville National Bank, has recently offered the Spirits two alternatives by which they could prepay their mortgage. The Spirits have just made their 20th annual payment. [A] Under the first alternative, the Spirits could prepay their mortgage at a 30% discount from the current principal outstanding. If current 10-year mortgage rates are...
2.   Suppose you have decided to buy a house. The mortgage is a 30-year mortgage with...
2.   Suppose you have decided to buy a house. The mortgage is a 30-year mortgage with an interest rate of 7%, compounded monthly. You borrow a total of $250,000. Given this, by the time you pay off the loan, how much in total (interest + principal) would the house cost you? (20 pts) 3.   How, reconsider the previous problem. Suppose you pay the mortgage according to those specifications (7% APR, monthly) for the first 10 years, but then you refinance...
6 years ago fraser family financed their new home with a 4.15 percent fixed rate 30-year...
6 years ago fraser family financed their new home with a 4.15 percent fixed rate 30-year mortgage. The house they bought cost $450,000 and they made a 20% down payment on the house. 1. How much did they borrow 6 years ago? 2. What is their monthly mortgage payment? 3. If they keep making these payments for the full loan term how much total interest will they pay on the loan? 4. What is their current loan balance?
The mortgage on your house is five years old. It required monthly payments of $1,390​, had...
The mortgage on your house is five years old. It required monthly payments of $1,390​, had an original term of 30​ years, and had an interest rate of 10% ​(APR). In the intervening five​ years, interest rates have fallen and so you have decided to refinance—that ​is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a​ 30-year term, requires monthly​ payments, and has an interest rate of 5.625% ​(APR). a. What monthly repayments...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT