Question: Crystal Ball has a 30 year, fully amortizing fixed rate mortgage, with monthly payments, for a $200,000 loan at 7%. In 5 years, interest rates

Crystal Ball has a 30 year, fully amortizing fixed rate mortgage,

Crystal Ball has a 30 year, fully amortizing fixed rate mortgage, with monthly payments, for a $200,000 loan at 7%. In 5 years, interest rates fall and Crystal can get a 25 year, fully amortizing fix rate mortgage with monthly payments at 6%. However, to get this new loan, Crystal needs to pay 2 points and $2,500 in fees. a) What is the monthly payment on Crystal's original loan at 7%? b) If Crystal gets the new loan, what would be the monthly payment on the new loan at 6%? c) What is the total cost, i.e. investment, (points and fees) of getting the new loan? d) What is the return on investment (from refinancing)? Assume Crystal stays in the property for the next 25 years the duration of the loan

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