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 |
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
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