Question

Suppose you bought your house 8 years ago, with a $185,000, 6.2% APR, 30 year loan. Today, (8 years later), you came to know that the long term interest rate has dropped to 5.8% so you shopped around to see whether it is worth refinancing your mortgage . You find a bank which is offering 5.8 % APR on a 20 year mortgage and the new loan comes with a 2.5 point origination fee. What is the return you would get if you refinanced ?

Name: suppose you bought your house 8 years ago with a 185000 62 apr 30 year loan today 8 years later you came to know that the long term interest rate has dropped to 58 so you shopped around to s 57766
Uploaded: 2023-04-29T18:41:08-08:00
Duration: 2 min 37 s
Channel: Supreeta N
Description: suppose you bought your house 8 years ago with a 185000 62 apr 30 year loan today 8 years later you came to know that the long term interest rate has dropped to 58 so you shopped around to s 57766

          Suppose you bought your house 8 years ago, with a $185,000, 6.2% APR, 30 year loan. Today, (8 years later), you came to know that the long term interest rate has dropped to 5.8% so you shopped around to see whether it is worth refinancing your mortgage . You find a bank which is offering 5.8 % APR on a 20 year mortgage and the new loan comes with a 2.5 point origination fee. What is the return you would get if you refinanced ?

Added by -Ngeles G.

Horngren’s Cost Accounting

Srikant M. Datar, Madhav V. Rajan 16th Edition

Instant Answer

Solved by Expert Supreeta N

04/29/2023

Step 1

To calculate the remaining balance on the current mortgage after 8 years, we can use a loan amortization calculator or formula. The remaining balance can be calculated by subtracting the total amount of principal paid in 8 years from the original loan amount. Show more…

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Suppose you bought your house 8 years ago, with a $185,000, 6.2% APR, 30 year loan. Today, (8 years later), you came to know that the long term interest rate has dropped to 5.8% so you shopped around to see whether it is worth refinancing your mortgage . You find a bank which is offering 5.8 % APR on a 20 year mortgage and the new loan comes with a 2.5 point origination fee. What is the return you would get if you refinanced ?