Question

Nesrin purchased a $325,000 house and paid 25 percent down. She got a 30-year fixed-rate mortgage with an annual interest rate of 5.75 percent. After five years she refinanced the mortgage for 25 years at a 5.35 percent annual interest rate. After she refinanced, what is the new monthly payment (to the nearest dollar)

Answer 1

$1,335.01

Step-by-step explanation:

First step

PV = -325000 * (1-25%) = -243750

N = 30*12 = 360

I/Y = 5.75%/12

FV = 0

Using the Financial calculator

CPT PMT = PMT (-PV, N, I/Y, FV)

CPT PMT = $1,422.46

Second Step

PMT = 1422.46

PV = -325000*(1-25%) = -243,750

I/Y=5.75%/12

N = 12*5 = 60

Using the Financial calculator

CPT FV = FV(PMT, -PV, I/Y, N)

CPT FV = $226,107.75

The Loan outstanding is $226,107.75 after 5 years

Third Step

PV = -226107.75

I/Y = 5.1%/12

N = 12*25 = 300

FV = 0

Using the Financial calculator

CPT PMT = PMT(-PV, N, I/Y, FV)

CPT PMT = $1,335.01

Hence, the new monthly payment is $1,335.01