Suppose you took out a $100,000 15-year fixed-rate mortgage at 4.5% (APR) 3 years ago. Now the market interest rate has dropped to 4% and you are considering refinancing your mortgage.
(1) What was the original monthly payment? (2) Suppose you have just made 36 monthly payments. What is the remaining balance of the mortgage?
(3) If you refinance with a mortgage with another bank and keep the remaining term (that is, 12 years until the mortgage is paid off), what would the new monthly payment be?

Answer rating: 100% (QA)

1 To calculate the original monthly payment we first need to calculate the monthly interest rate The ... View the full answer