Question

Fred Jones bought a home with a 13% adjustable rate mortgage for 20 years. He paid $11.72 monthly per thousand on his original loan. At the end of 4 years he owes the bank $55,000. Now that interest rates have gone down to 11.5%, the bank will renew the mortgage at this rate or Fred can pay $55,000. Fred decides to renew and will pay $10.67 monthly per thousand on this loan.

What is the amount of the old and new monthly payment? What is the percent of decrease in his new monthly payment (to the nearest tenth)? You can ignore the small amount of principal that has been paid.

old payment = $ _____
new payment = $ _____
_____ % decrease

Answer 1

The old monthly payment is: 644.60

The new monthly pament is: 586.85

The percentage is: 9.0