Question

The mortgage on your house is 5 years old. It required monthly payments of $1402, had an original term of 30 years, and had an interest rate of 10% (apr). In the intervening 5 years interest rates have fallen and so you have decided to refinance that is, you will roll over the outstanding balance into a new mortgage. The new mortgage has a 30 year term, requires monthly payments and has an interest rate of 6.625% (apr).

Answer 1

Answer:

a.

Firs, we need to compute the balance remaining on the old mortgage.

Let,

PV = original loan value

r = interest rate = 10% / 12 = 0.833% per...

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