Question

The Keller's discovered that they could reduce their mortgage interest rate from 10% to 4%. The value of homes in their neighborhood has been increasing at the rate of 5% annually. If the Keller's were to refinance their house with $3,000 in closing costs added to their current mortgage balance ($277,000) over a period of time which coincides with their chosen retirement age in 20 years, what would be their new monthly payment including principal and interest

Answer 1

The Keller's

Their new monthly payment including principal and interest is:

= $1,817.94

Step-by-step explanation:

a) Data and Calculations:

Current mortgage balance = $277,000

Closing costs for refinancing 3,000

Total mortgage balance = $300,000

Mortgage interest rate changed from 10% to 4% upon refinancing

Loan Amount 300000

Loan Term 20 years 0 months

Interest Rate 4

Compound Monthly (APR)

Pay Back Every Month

Results:

Payment Every Month $1,817.94

Total of 240 Payments $436,305.84

Total Interest $136,305.84