please show how to solve this in excel and please show the formulas needed Two years ago, you purchase a house of $500,000. You borrow a mortgage with 80% of LTV (loan to value ratio). The interest rate on the mortgage is 6.25%. Payment terms are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 5% with monthly payments for 30 years. Suppose that the new lender will charge 2.5 discount points on the new loan and other refinancing costs will equal $10,000. What is the new loan amount if you choose to refinance? Should you refinance if you hold the loan for 30 years? If you choose to refinance, at least how many years should you stay in the house (do not prepay)? Why?
please show how to solve this in excel and please show the formulas needed Two years ago, you purchase a house of $500,000. You borrow a mortgage with 80% of LTV (loan to value ratio). The interest rate on the mortgage is 6.25%. Payment terms are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 5% with monthly payments for 30 years. Suppose that the new lender will charge 2.5 discount points on the new loan and other refinancing costs will equal $10,000. What is the new loan amount if you choose to refinance? Should you refinance if you hold the loan for 30 years? If you choose to refinance, at least how many years should you stay in the house (do not prepay)? Why?
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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please show how to solve this in excel and please show the formulas needed
Two years ago, you purchase a house of $500,000. You borrow a mortgage with 80% of LTV (loan to value ratio). The interest rate on the mortgage is 6.25%. Payment terms are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 5% with monthly payments for 30 years. Suppose that the new lender will charge 2.5 discount points on the new loan and other refinancing costs will equal $10,000.
- What is the new loan amount if you choose to refinance?
- Should you refinance if you hold the loan for 30 years?
- If you choose to refinance, at least how many years should you stay in the house (do not prepay)? Why?
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