You have been living in the house you bought 5 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 20-year loan at an annual stated rate of 9.0%. You have just paid off the 60th monthly payment. Interest rates have meanwhile dropped steadily to 3.5% per year, and you think it is finally time to refinance the remaining balance. But there is a catch. The fee to refinance your loan is $4,500. Should you refinance the remaining balance? How much would you save/lose if you decided to refinance?

No,lose $84,658.62

To determine whether or not you should refinance the remaining balance and how much you would save or lose, we need to compare the costs and benefits involved in refinancing.

Step 1: Calculate the remaining balance
Since you have just made the 60th monthly payment, you have 20 years (240 months) in total for your loan term. Assuming you have been making consistent payments, you can calculate the remaining balance using an amortization schedule or a mortgage calculator.

Step 2: Calculate the remaining balance at the current interest rate
Use the remaining balance calculated in step 1 and the current interest rate of 3.5% to determine the new monthly payment amount. This can be done using an amortization schedule or mortgage calculator.

Step 3: Calculate the total cost of sticking with the current loan
Using the remaining balance from step 1 and the current interest rate of 9.0%, determine the remaining monthly payments and total cost until the end of the loan.

Step 4: Calculate the cost of refinancing
Add the fee to refinance, which is $4,500, to the new loan amount calculated in step 2.

Step 5: Compare the total cost of each scenario
Compare the total cost of sticking with the current loan (step 3) versus refinancing (step 4). The lower total cost indicates a better financial decision.

To calculate the savings or loss, subtract the total cost of refinancing from the total cost of sticking with the current loan.

By following these steps, you will be able to determine whether it is financially beneficial to refinance.