EXTERNAL INFORMATION

Economic Information

General inflation has averaged $3\mathrm{.}0\%$ annually for the last $20$ years and is expected to continue at $3\%.$

They live in a community property state.

Bank Lending Rates

$15-$year conforming annual rate mortgages are $3\mathrm{.}25\%.$

$30-$year conforming rate mortgages are $3\mathrm{.}75\%.$

Any closing costs associated with mortgage refinance are an additional $3\%$ of the amount mortgaged and will be included in the mortgage.

Investment Information

They expect to have an $8\mathrm{.}5\%$ rate of return for education and $8\mathrm{.}5\%$ for retirement.

INTERNAL INFORMATION

The Residence

The current value of the residence is $$550,000.$ The balance of the $30-$year mortgage at $5\mathrm{.}5\%$ is $$260,514.$ The land value is $$150,000.$ The monthly payment is $$1,703\mathrm{.}37$ and they have owned it for $8$ years. They will not qualify for refinancing until Mr$.$ Young has been employed for $12$ months.

Insurance Information

Life Insurance

Neither Alan nor Angel Young currently have any life insurance. Mr$.$ Young expects to have $$50,000$ of group$-$term life insurance from his employer.

Mr$.$ Young starts his new job today. What would be his new mortgage payment when he is eligable to refinance to a $15$ year mortgage?