View the step-by-step solution to:


Screen Shot 2020-02-10 at 9.40.12 PM.png

src="/qa/attachment/11094309/" alt="Screen Shot 2020-02-10 at 9.40.16 PM.png" />

Please help me to solve it!

Screen Shot 2020-02-10 at 9.40.12 PM.png

When the Sampsons purchased a home, they obtained a thirty-year mortgage with a fixed interest rate of
6%. Their monthly mortgage payment (excluding property taxes and insurance) is about $780 per month.
The Sampsons still owe about $130,000 on their existing mortgage. Today, they could obtain a thirty-year
$130,000 mortgage with an interest rate of 5%. Dave and Sharon want to determine how much they can
lower their monthly payments by refinancing. If they refinance their home, they would incur transaction
fees of $3,500 after considering any tax effects. The Sam psons take the standard deduction when
calculating their personal income taxes, so their interest payments on their mortgage are not tax-
deductible. 1. Use a Web site or a financial calculator to determine the monthly mortgage payment
(excluding property taxes and insurance) on a $130,000 mortgage if the Sampsons obtain a
new thirty-year mortgage at the 5% interest rate. Mortgage loan $130,000
Interest rate 5%
Years 30
Monthly mortgage payment 2. The Sampsons expect that they will not move for at least three years. Advise the Sampsons
on whether they should refinance their mortgage by comparing the savings of refinancing with the costs. Current mortgage payment $780
Mortgage payment at 5% Monthly savings Annual savings Years in house after refinancing 3 Total savings

Screen Shot 2020-02-10 at 9.40.16 PM.png

Top Answer

(1) Monthly mortgage payment = $697 .87 (2) Current mortgage payment $780 Mortgage... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question