Finance
posted by Anonymous .
(15 points) You have been living in the house you bought 10 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 15year loan at an annual stated rate of 9%. You have just paid off the 120th monthly payment. Interest rates have meanwhile dropped steadily to 6% 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 $4,000. Should you refinance the remaining balance? How much would you save/lose if you decided to refinance?

120 monthly payments = $240,000
That leaves $60,000 yet to be paid
$60,000 at 9% = $60,000 + 5,400 in interest total $65,400
$60,000 at 6% = $3,600 in interest or $63,600 then add the fee and the total is $$67,600
9% = $65,400
6% = $67,600
You would lose $2,200 if you refinanced.
Respond to this Question
Similar Questions

Math 104
Five years ago, you bought a house for $171,000. You had a down payment of $35,000, which meant you took out a loan for $136,000. Your interest rate was $5.6% fixed. You would like to pay more on your loan. You check your bank statement … 
math
Five years ago, you bought a house for $151,000, with a downpayment of $30,000 which meant you took out a $121,000 loan. Your interest rate was 5.75% fixed. You would like to pay more on your loan. You check your bank statement and … 
MATH
Five years ago, you bought a house for $151,000, with a down payment of $30,000, which meant you took out a loan for $121,000. Your interest rate was 5.75% fixed. You would like to pay more on your loan. You check your bank statement … 
public finance
Your annual income is $50,000. You want to take out a mortgage loan to buy a house. The rule on mortgage loan requires that your annual mortgage payment cannot exceed 30% of your annual income. If the current interest rate is 5% for … 
accountancy
You have been living in the house you bought 10 years ago for $500,000. At that time, you took out a loan for 80% of the house at a fixed rate 30year loan at an annual stated rate of 6%. You have just paid off the 120th monthly payment. … 
finance
You have been living in the house you bought 10 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 15year loan at an annual stated rate of 9%. You have just paid off the 120th monthly payment. … 
finance
You have been living in the house you bought 10 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 15year loan at an annual stated rate of 9%. You have just paid off the 120th monthly payment. … 
Finance
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 20year loan at an annual stated rate of 9.0%. You have just paid off the 60th monthly payment. … 
Finance
You have been living in the house you bought 6 years ago for $250,000. At that time, you took out a loan for 80% of the house at a fixed rate 25year loan at an annual stated rate of 9.5%. You have just paid off the 72th monthly payment. … 
Finance
You have been living in the house you bought 6 years ago for $250,000. At that time, you took out a loan for 80% of the house at a fixed rate 25year loan at an annual stated rate of 9.5%. You have just paid off the 72th monthly payment. …