When Florio and Rhoda bought their home, they borrowed $200,000 for 30 yearsat 6%, compounded monthly. After making 120 payments of $1199 per month, they plan to refinance. They find that they can refinance at 4.5%, compounded monthly, for 15 years. There is a one-time refinancing charge of $750, added to the amount of the refinanced loan. a. find the payoff amount (unpaid balance) of Florio and Rhoda original loan b. find the amount of their new loan (amount refinanced) c. find their new monthly payment amount for the refinanced loan

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.