Question

13) You paid $1,498.88 a month (end-of-month payments) for a home with a 6% mortgage over 30 years. Now that mortgage rate has dropped to 3.5% for the same loan, you want to refinance your mortgage up to the original home value. If the closing cost is estimated to be $6,000, how long (in months, rounded to the nearest) before you can break even on the refinance cost?

please answer using excel functions if possible

Answer #1

formulas used :-

current monthly installment | 1498.88 |

rate (monthly) | 0.005 |

tenure(in months) | 360 |

value of loan | =PV(D7,D8,-D6) |

new rate (monthly) | =3.5%/12 |

new installment | =PMT(D10,D8,-D9) |

saving in installment | =D6-D11 |

cost of closing | 6000 |

break even months | =D13/D12 |

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estimated to be $6,000, how long (in months, rounded to the
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