A person purchased a $239,127 home 10 years ago by paying 15% down and signing a 30-year mortgage at 10.8% compounded monthl
y. Interest rates have dropped and the owner wants to refinance the unpaid balance by signing a new 20-year mortgage at 6 % compounded monthly. How much interest will refinancing save?
1 answer:
Answer:
$135,629.37
Step-by-step explanation:
For computing the interest amount first we need to find out the monthly payment, present value, monthly payment and finally the interest amount which is shown below with the help of an attached spreadsheet
The value of the loan could come by
= $239,127 - $239,127 × 15%
= $203,257.95
The amount of interest saved is
= ($1,905 × 20 × 12) - ($1,399.18 × 20 × 12)
= $135,629.37
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