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2 August, 18:50

Five years ago you took out a 30-year mortgage with an APR of 6.5% for $200,000. If you were to refinance the mortgage today for 20 years at an APR of 4.25%, how much would your monthly payment change by?

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  1. 2 August, 19:13
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    -$104.79

    Explanation:

    Current Mortgage Payment:

    P/Y = 12,

    N = 360,

    I/Y = 6.5,

    PV = $200,000,

    Solve

    for PMT = $1,264.14

    Current Mortgage Balance:

    P/Y = 12,

    N = 300,

    I/Y = 6.5,

    PMT = $1,264.14,

    Solve

    for PV = $187,221.9

    New Mortgage Payment:

    P/Y = 12,

    N = 240,

    I/Y = 4.25,

    PV = $187,222.54,

    Solve

    for PMT = $1,159.35

    Current Payment - New Payment

    = $1,159.35 - $1,264.14

    = - $104.79
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