Suppose you take out a 30-year $300,000 mortgage with an APR of 6%. You make payments for 4 years (48 monthly payments) and

Question

3 years ago

8

Suppose you take out a 30-year $300,000 mortgage with an APR of 6%. You make payments for 4 years (48 monthly payments) and

then consider refinancing the original loan. The new loan would have a term of 20 years, have an APR of 5.6%, and be in the amount of the unpaid balance on the original loan. (The amount you borrow on the new loan would be used to pay off the balance on the original loan.) The administrative cost of taking out the second loan would be $2300. Use the information to complete parts (a) through (e) below.
a. What are the monthly payments on the original loan?
$------- (Round to the nearest cent as needed.)

b. A short calculation shows that the unpaid balance on the original loan after 4 years is $283,843.60, which would become the amount of the second loan. What would the monthly payments be on the second loan?
$--------- (Round to the nearest cent as needed.)

c. What would be the total amount you would pay if you continued with the original 30-year loan without refinancing?
$------- (Round to the nearest cent as needed.)

d. What would be the total amount you would pay with the refinancing?
$-------- (Round to the nearest cent as needed.)

Mathematics