robert7248
robert7248
08.12.2020 • 
Mathematics

Suppose that you are currently making monthly payments on a $455,689 30-year mortgage at 5.33% interest compounded monthly. For the last 8 years, you have been paying the regular
monthly payments. You now have the option to refinance your current mortgage with a new 25-
year mortgage that has an interest rate of 4.89% compounded monthly. Note that the lender of
the new loan has a closing cost fee of $1,500 (for title insurance, home appraisal costs, etc.) for
the new (refinanced) mortgage. The lender stipulates that closing cost must be paid in cash and
cannot be part of the new loan. You are to determine whether you would save or lose money in
interest if you were to refinance your home. Take the closing costs into account when
determining if you would save or lose money.

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