(10 Points) You are refinancing your existing mortgage with a new 30 year mortgage. The existing mortgage has a $400,000 outstanding balance so the new loan will be for $400,000. 6.5% APR is the current fair market rate on 30 year monthly pay mortgages. The mortgage company has offered you the opportunity to pay a “point” (1% of the total amount of the loan) to “buy down” the interest rate to 6.25% APR. If you plan on staying in the house for five years should you take the offer?
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