Question

Mr. Aman wants to refinance his mortgage loan as the interest rates in the market are reduced. The outstanding balance will be borrowed by Aman at the rate of 5% APR. The mortgage loan term was 15 years at 6% APR. The monthly payment on current mortgage loan is $4,000. Aman just made 15th payment. How much amount Aman needs to borrow to refinance his mortgage?

(a) $476,591.71
(b) $448,690.58
(c) $474,014.06
(d) $505,820.97

Answer 1

Mr. Aman needs to calculate the outstanding balance of his original mortgage after 15 payments to determine how much he needs to borrow to refinance at a reduced interest rate of 5% APR.the correct option is: (c) $474,014.06

Step-by-step explanation:

The student's question involves refinancing a mortgage loan and calculating the outstanding balance that Mr. Aman needs to borrow at a reduced interest rate. We know the original term is 15 years at 6% APR, the monthly payment is $4,000, and Mr. Aman has made 15 payments so far.

To calculate the new loan amount for refinancing, we need to determine the current outstanding balance after 15 payments have been made. This involves calculating the remaining balance of the original mortgage using the original loan terms and the number of payments made.

After finding the outstanding balance, that will be the amount Mr. Aman needs to refinance at the new reduced rate of 5% APR. The complexity of the calculations used here generally requires the use of a financial calculator or an amortization formula.the correct option is: (c) $474,014.06