A5 Aanswer Mortgage Points Problem

A5 Aanswer Mortgage Points Problem - A5 Answer Mortgage...

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A5 Answer Mortgage Points Problem Points Table Provident Funding [per $100,000 borrowed 10 year loan as of 9-7-2010 Rate Pts/Credit % Pts/Credit $ 3.250 % 2.625 % $2,625.00 3.375 % 1.625 % $1,625.00 3.500 % 0.625 % $625.00 3.580 % 0.00 % $0.00 3.625 % -0.375 % ($375.00) 3.750 % -1.500 % ($1,500.00) 3.875 % -2.125 % ($2,125.00) 4.000 % -2.500 % ($2,500.00) 4.125 % -2.625 % ($2,625.00) Question: Your mortgage balance is currently $117,000 with 10 years remaining on the original 30 year contract at 6.75%. a) Determine the original principal? First find pmt for 117,000 @6.75% over 10 years. Then set yrs to 30 and solve for PV Pmt = 1343.44; that pmt will pay off a balance of $207,130.14 over 30 yrs = original balance You have decided to refinance because the current market mortgage rate is now 3.58% . As part of the refinance package, you are offered the option to "buy down" the market % mortgage rate by paying points. One point equals 1% of the principle—for each % drop in interest rates according to the above table. (b) Determine the new monthly payment associated with a refinance at the
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