Question

I!! Question Help A person purchased a $139,585 home 10 years ago by paying 15% down and signing a 30-year mortgage at 8.1% compounded monthly. Interest rates have dropped and the owner wants to refinance the unpaid balance by signing a new 20-year mortgage at 4.8% compounded monthly. How much interest will refinancing save? Money Saved: $(Round to the nearest cent as needed.)

Answer 1

Please refer to below spreadsheet for calculation and answer. Cell reference also provided.

A B с D 1 2 3 Original Loan: Home Price Down payment Loan Amount Term in years APR Monthly payment amount $139,585.00 15% $118,647.25 30 8.10% $878.88 Loan balance after 10 years(currently) $104,296.14 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 Refinance: Loan Amount Term in years APR Monthly payment Amount $104,296.14 20 4.80% $676.84 Money saved $48,489.41

Cell reference -

А B с 1 2 3 4 5 6 7 8 9 10 11 Original Loan: Home Price Down payment Loan Amount Term in years APR Monthly payment amount 139585 0.15 =C3* (1-C4) 30 0.081 =PMT(C7/12,C6*12,-C5,,0) Loan balance after 10 years(currently) =PV(C7/12,20*12,-C8,,0) 12 Refinance: Loan Amount Term in years APR Monthly payment Amount =C10 20 0.048 =PMT(C15/12,C14*12,-C13,0) 13 14 15 16 17 18 19 20 21 Money saved =(C8-C16)*20*12

Hope it will help, please do comment if you need any further explanation. Your feedback would be highly appreciated.