You have been living in the house you bought 7 years ago for $300,000. At that time,you took out a loan for 80% of the house at a fixed rate 15-year loan at an annualstated rate of 8.0%. You have just paid off the 84th monthly payment. Interest rateshave meanwhile dropped steadily to 6.0% per year, and you think it is finally time torefinance the remaining balance over the residual loan life. But there is a catch. The feeto refinance your loan is $5,000. Should you refinance the remaining balance? Howmuch would you save/lose if you decided to refinance?a. Yes, gain $7,287.20b. No, lose $12,287.20c. Yes, gain $12,287.20d. No, lose $7,287.20

Mortgage loans are paid by equal fixed monthly payments that carry payment for interest and payment…

You have been living in the house you bought 7 years ago for $300,000. At that tin you took out a loan for 80% of the house at a fixed rate 15-year loan at an annual stated rate of 8.0%. You have just paid off the 84th monthly payment. Interest rates have meanwhile dropped steadily to 6.0% per year, and you think it is finally time t refinance the remaining balance over the residual loan life. But there is a catch. The to refinance your loan is $5,000. Should you refinance the remaining balance? How much would you save/lose if you decided to refinance? a. Yes, gain $7,287.20 b. No, lose $12,287.20 c. Yes, gain $12,287.20 d. No, lose $7,287.20

You have been living in the house you bought 7 years ago for $300,000. At that tin you took out a loan for 80% of the house at a fixed rate 15-year loan at an annual stated rate of 8.0%. You have just paid off the 84th monthly payment. Interest rates have meanwhile dropped steadily to 6.0% per year, and you think it is finally time t refinance the remaining balance over the residual loan life. But there is a catch. The to refinance your loan is $5,000. Should you refinance the remaining balance? How much would you save/lose if you decided to refinance? a. Yes, gain $7,287.20 b. No, lose $12,287.20 c. Yes, gain $12,287.20 d. No, lose $7,287.20

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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You bought a condo 2 years ago. To finance the purchase, you took out a mortgage for $575,000. The interest rate on the mortgage is 8.5% and the amortization period is 20 years. You chose to make 26 payments per year and each payment is $2,274.23. Your last payment was yesterday. How much principal remains owing today? The principal that remains owing today is $ (Round to the nearest cent as needed.)
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000.Your current situationHow much money have you paid to the loan company so far (over the last 10 years)?
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000. How much interest will you pay over the life of the new loan?
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000. How much total interest will you be paying (consider the interest you paid over the first 10 years of your original loan as well as interest on your refinanced loan)
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000.Your current situationHow much of the original loan have you paid off? (i.e, how much have you reduced the loan balance by? Keep in mind that interest is charged each month - it's not part of the loan balance.)
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000. Since interest rates have dropped, you consider refinancing your mortgage at a lower 6% rate.If you took out a new 30 year mortgage at 6% for your remaining loan balance, what would your new monthly payments be?
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000. Analyzing the refinanceNotice that if you refinance, you are going to be making payments on your home for another 30 years. In addition to the 10 years you've already been paying, that's 40 years total.How much will you save each month because of the lower monthly payment?
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 8% interest for 30 years.Your existing mortgage (the one you got 10 years ago) This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $118,428 left to pay on your loan. Your house is now valued at $210,000.Your current situation How much interest have you paid so far (over the last 10 years)?
Suppose that 10 years ago you bought a home for $170,000, paying 10% as a down payment, and financing the rest at 7% interest for 30 years. How much total interest will you pay over the life of the existing loan?
Suppose that 10 years ago you bought a home for $150,000, paying 10% as a down payment, and financing the rest at 7% interest for 30 years. How much money have you paid to the loan company so far (over the last 10 years)?
Five years ago you borrowed $200,000 to finance the purchase of a $240,000 home. The interest rate on the old mortgage loan is 6 percent. Payments are being made monthly to amortize the loan over 30 years. You have found another lender who will refinance the current outstanding loan balance at 4 percent with monthly payments for 30 years. The new lender will charge two discount points on the loan. Other refinancing costs will equal $6,000. There are no prepayment penalties associated with either loan. You feel the appropriate opportunity cost to apply to this refinancing decision is 4 percent. Required: a. What is the payment on the old loan? b. What is the current loan balance on the old loan (five years after origination)? c. What would be the monthly payment on the new loan? d. Should you refinance today if the new loan is expected to be outstanding for five years? Note: For all requirements, Do not round intermediate calculations and round your final answer to 2 decimal places. a.…
Ten years ago you borrowed $300,000 to finance the purchase of a $350,000 house. The interest rate on the old mortgage is 7%. 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 at 4.5% with monthly payments for 20 years. The new lender will charge one discount point on the loan. Other refinancing costs will equal $8,000. There are no prepayment penalties associated with either loan. You feel the appropriate opportunity cost to apply to this refinancing decision is 4.5%. What should be the monthly payment on the new loan (answers rounded to hundreds)? Excel O a) $1,300 b) $1,600 O c) $1,900 d) $2,000 e) $2,200

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