Suppose that you take out a 40-year $175000 mortgage with an APR of 6%. You make payments for 3 years and then you consider refinancing the original loan. The new loan would have a term of 15 years, have and APR of 5.7% and be in the amount of the unpaid balance on the original loan. The administrative cost of taking out the second loan would be $1700. What are the monthly payments on the original loan? What would the monthly payment of the second loan be? What would the total amount you would pay if you continued with the original 40-year loan without refinancing? What would the total amount would you pay with the refinancing? Suppose you take out a 40-year $175,000 mortgage with an APR of 6%. You make payments for 3 years (36 monthly payments) and then consider refinancing the originalloan. The new loan would have a term of 15 years, have an APR of 5.7%, and be in the amount of the unpaid balance on the original loan. (The amount you borrow on thenew loan would be used to pay off the balance on the original loan.) The administrative cost of taking out the second loan would be $1700. Use the information to completeparts (a) through (e) below.a. What are the monthly payments on the original loan?(Round to the nearest cent as needed.)b. A short calculation shows that the unpaid balance on the original loan after 3 years is $171,543.38, which would become the amount of the second loan. What would themonthly payments be on the second loan?$(Round to the nearest cent as needed.)c. What would be the total amount you would pay if you continued with the original 40-year loan without refinancing?$(Round to the nearest cent as needed.)d. What would be the total amount you would pay with the refinancing?$(Round to the nearest cent as needed.)e. Compare the two options and decide which one you would choose. What other factors should be considered in making the decision?The best option would be toassuming that you can afford the monthly payments.$14+

Information Provided: Mortgage amount = $175,000 APR = 6% Period = 40 years

Answered: a. What are the monthly payments on the…

Pfin (with Mindtap, 1 Term Printed Access Card) (mindtap Course List)

7th Edition

ISBN:9780357033609

Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Publisher:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk

Chapter7: Using Consumer Loans

Section: Chapter Questions

Problem 4FPE: Calculating single-payment loan amount due at maturity. Stanley Price plans to borrow 8,000 for five...

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Suppose that you take out a 40-year $175000 mortgage with an APR of 6%. You make payments for 3 years and then you consider refinancing the original loan. The new loan would have a term of 15 years, have and APR of 5.7% and be in the amount of the unpaid balance on the original loan. The administrative cost of taking out the second loan would be $1700. What are the monthly payments on the original loan? What would the monthly payment of the second loan be? What would the total amount you would pay if you continued with the original 40-year loan without refinancing? What would the total amount would you pay with the refinancing?

Suppose you take out a 40-year $175,000 mortgage with an APR of 6%. You make payments for 3 years (36 monthly payments) and then consider refinancing the original
loan. The new loan would have a term of 15 years, have an APR of 5.7%, and be in the amount of the unpaid balance on the original loan. (The amount you borrow on the
new loan would be used to pay off the balance on the original loan.) The administrative cost of taking out the second loan would be $1700. Use the information to complete
parts (a) through (e) below.
a. What are the monthly payments on the original loan?
(Round to the nearest cent as needed.)
b. A short calculation shows that the unpaid balance on the original loan after 3 years is $171,543.38, which would become the amount of the second loan. What would the
monthly payments be on the second loan?
$(Round to the nearest cent as needed.)
c. What would be the total amount you would pay if you continued with the original 40-year loan without refinancing?
$
(Round to the nearest cent as needed.)
d. What would be the total amount you would pay with the refinancing?
$
(Round to the nearest cent as needed.)
e. Compare the two options and decide which one you would choose. What other factors should be considered in making the decision?
The best option would be to
assuming that you can afford the monthly payments.
$
1
4
+

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