Q.Considering the following information, what is the net benefit if the borrower refinances the loan (benefit analysis)? Initial Loan balance: 600,000 Initial loan term: 30 years Current Loan interest: 5.25% Remaining term on current loan: 15 years New loan term: 15 years New loan interest: 2.75% Cost of refinancing: 5% of the loan amount Expected holding period: 7 years Using Excel
Mortgages
A mortgage is a formal agreement in which a bank or other financial institution lends cash at interest in return for assuming the title to the debtor's property, on the condition that the obligation is paid in full.
Mortgage
The term "mortgage" is a type of loan that a borrower takes to maintain his house or any form of assets and he agrees to return the amount in a particular period of time to the lender usually in a series of regular equally monthly, quarterly, or half-yearly payments.
Q.Considering the following information, what is the net benefit if the borrower refinances the loan (benefit analysis)?
Initial Loan balance: 600,000
Initial loan term: 30 years
Current Loan interest: 5.25%
Remaining term on current loan: 15 years
New loan term: 15 years
New loan interest: 2.75%
Cost of refinancing: 5% of the loan amount
Expected holding period: 7 years
Using Excel
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