Question

A while ago, a couple purchased a home with a sales price of $890,000, making a 15% down payment and financing the rest with a 30-year adjustable rate mortgage fixed at 3.2% for the first seven years. Now that the fixed rate period is up, the couple is facing a higher adjustable rate. They now plan to refinance into a fixed rate 15-year mortgage at 4.9%, allowing them to pay it off before they retire. What will their new monthly payments be? Assume there are no costs associated with the refinance.

Answer 1

Sales price of home	$    890,000.00
Less: down Payment 15%	$    133,500.00
Loan	$    756,500.00
Rate	3.20%
Period	360
Monthly payment	$3,271.61
Total principal paid	($117,916.96)
Loan balance at end of 7 years =PV	$    638,583.04
Rate	4.90%
Nper	180
New Monthly payment	$5,016.67

A while ago, a couple purchased a home with a sales price of $890,000, making a 15% down payment and financing the rest with a 30-year adjustable rate mortgage fixed at 3.2% for the first seven years. Now that the fixed rate period is up, the couple is facing a higher adjustable rate. They now plan to refinance into a fixed rate 15-year mortgage at 4.9%, allowing them to pay it off before they retire. What will their new monthly payments be? Assume 1 there are no costs associated with the refinance 3 Sales price of home 4 Less: down Payment 15% 5 Loan 6 Rate 7 Period 8 Monthly payment 9 Total principal paid 10 Loan balance at end of 7 years =PV 11 Rate 12 Nper 13 New Monthly payment 890000 =B3 15% =B3-B4 0.032 =30*12 =PMT(B6/12,B7,-85) =CUMPRINC(B6/12,B7,B5,1,84,0) =B5+B9 0.049 =15*12 =PMT(B11/12,B12,-B10)