Question

Five years ago you took out a 30-year mortgage with an APR of 6.5% for $200,000. If you were to refinance the mortgage today for 20 years at an APR of 4.25%, how much would your monthly payment change by?

Answer 1

-$104.79

Step-by-step explanation:

Current Mortgage Payment:

P/Y = 12,

N = 360,

I/Y = 6.5,

PV = $200,000,

Solve

for PMT = $1,264.14

Current Mortgage Balance:

P/Y = 12,

N = 300,

I/Y = 6.5,

PMT = $1,264.14,

Solve

for PV = $187,221.9

New Mortgage Payment:

P/Y = 12,

N = 240,

I/Y = 4.25,

PV = $187,222.54,

Solve

for PMT = $1,159.35

Current Payment - New Payment

= $1,159.35- $1,264.14

= -$104.79