Davie bought his home several years ago with a 30-year fixed rate mortgage at an interest rate of7.87%. He bought the house initially for $207,000 with a down payment of $36,000.Since he bought the house it has appreciated considerably, and is now worth $782,000. Davie isconsidering refinancing the house while taking out some of his home equity as cash. He isinterested a 15-year fixed rate mortgage and the bank has offered him one at 3.61% interest. Hewill need $99,000 to pay off his initial mortgage, plus he wants to take out an additional $75,000for himself.What will be the change in Davie's monthly mortgage payment if he chooses to refinance?Your answer can be positive or negative, and should be the New Mortgage Payment - Old MortgagePayment. Round your answer to two decimal places.

A mortgage is a covered loan where the borrower is given a loan in exchange for keeping the property…

Answered: Davie bought his home several years ago…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Da Feng is looking to refinance his home because rates have gone down since he purchased the house 5 years ago. He started with a 30-year fixed-rate mortgage of $276,000 at an annual rate of 7.30%. He has to make monthly payments. He can now get a 25-year fixed-rate mortgage at an annual rate of 4.30% on the remaining balance of his initial mortgage. This loan also requires monthly payments. In order to re-finance, Da Feng will need to pay closing costs of $3,700. These costs are out of pocket and cannot be rolled into the new mortgage. How much will refinancing save Da Feng? (i.e. What is the NPV of the refinancing decision?) $181,311.02 您不应该选择此项 Your calculation was based on a wrong balance on the existing mortgage. O $85,659.68 $86,861.44 $83,161.44
Rachel purchased a car for $17,500 three years ago using a 4-year loan with an interest rate of 10.8 percent. She has decided that she would sell the car now, if she could get a price that would pay off the balance of her loan. What is the minimum price Rachel would need to receive for her car? Calculate her monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan.
John and Sally Claussen are considering the purchase of a hardware store from John Duggan. The Claussens anticipate that the store will generate cash flows of $81,000 per year for 20 years. At the end of 20 years, they intend to sell the store for an estimated $510,000. The Claussens will finance the investment with a variable rate mortgage. Interest rates will increase twice during the 20-year life of the mortgage. Accordingly, the Claussens’ desired rate of return on this investment varies as follows: (FV of $1, PV of $1, FVA of $1, PVA of $1, FVAD of $1 and PVAD of $1) (Use appropriate factor(s) from the tables provided.) Years 1–5 7 % Years 6–10 9 % Years 11–20 11 % Required: PV of $81,000 cash flow PV of $510,000 selling price Maximum paid for store Years 1-5 ? Years 6-10 ? Years 11-20 ? Year 20 ? ? Total ? + ? = ? What is the maximum amount the Claussens should pay John Duggan for the hardware…
Ten years ago Jim took a mortgage loan of $200,000 to be repaid in 20 equal annual installments of $30,197.34. The bank has told him that they would accept $145,000 today as payment in full for the remainder of the loan. What is the balance on this loan? If we assume that Jim has the money, what interest rate must he earn on alternative investments in order not to accept the bank offer?
Kiran has already saved $575,000 as a deposit for a new waterfront villa in the Hamptons. It will cost him a total of $3.5 million to purchase this property. He plans to borrow the rest from CityGroup as a mortgage over 15 years at a rate of 3.2% p.a. compounding monthly. What would be Kiran's monthly repayments?
Hank purchased a car for $20,500 two years ago using a 4-year loan with an interest rate of 6.0 percent. He has decided that he would sell the car now if he could get a price that would pay off the balance of his loan. What’s the minimum price Hank would need to receive for his car? Calculate his monthly payments, then use those payments and the remaining time left to compute the present value (called balance) of the remaining loan. (Do not round intermediate calculations and round your final answer to 2 decimal places.) Minimum Price = $_____.__
Please help me correctly. Theresa and Raul purchased a house 10 years ago for $220,000. They made a down payment of 20% of the purchase price and secured a 30 year conventional home mortgage at 4.5% per year compounded monthly on the unpaid balance. The house is now worth $280,000. How much equity do Teresa and Raul have in their house now?.
Joe wants to own a home in the future. He asks you describe an advantages and disadvantage of a FRM versus an ARM. He then asks you to describe the advantages and disadvantages of a 15-year loan versus a 30-year loan. He also wants to know how the portion of the home payment that comprises interest changes over the years assuming he takes out an FRM. Is there anything he can do to reduce the total amount he’ll pay for the home? What else would be added to his monthly mortgage payment? What are three benefits of home ownership? What are three benefits of renting?
Five years ago, Diane secured a bank loan of $390,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was 30 years, and the interest rate was 7%/year compounded monthly on the unpaid balance. Because the interest rate for a conventional 30-year home mortgage has now dropped to 5.5%/year compounded monthly, Diane is thinking of refinancing her property. (Round your answers to the nearest cent.) (a) What is Diane's current monthly mortgage payment? (b) What is Diane's current outstanding principal? (c) If Diane decides to refinance her property by securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of 5.5%/year compounded monthly, what will be her monthly mortgage payment? (d) How much less will Diane's monthly mortgage payment be if she refinances?
Several years ago, Bill Smith borrowed $125,000 to buy his house. He has a 15 year, monthly payment mortgage with an interest rate of 8.75 percent per annum. Bill is thinking about refinancing his house so he would like to know the payoff on his current loan. Assuming that he just made payment number 94, compute the payoff on Bill's loan. Round your answer to 2 decimal places; record your answer without commas and without a dollar sign.

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