Question

If a current mortgage payment of $792 per month can be reduced to $578 per month by refinancing, how many months would you need to remain in the house to recoup refinancing charges of $3,784? (Round up to the nearest month.)

A) five months
B) seven months
C) eighteen months
D) the maturity of the loan

Answer 1

To recoup the refinancing charges of $3,784, you would need to remain in the house for approximately 18 months.

Step-by-step explanation:

To recoup refinancing charges of $3,784, you would need to calculate how many months it would take to save the difference between the original mortgage payment of $792 and the refinanced payment of $578. This difference is $792 - $578 = $214. Divide the refinancing charges by the monthly savings: $3,784 / $214 = 17.67 months. Rounded up to the nearest month, you would need to remain in the house for 18 months to recoup the refinancing charges.