Amount equal to the outstanding balance of the loan

Assignment Help Financial Management

Reference no: EM131521120

A home owner obtained a mortgage 5 years ago for OMR 105,000 at 13% amortized over 30 years (monthly payments). Mortgage rates have dropped, so that a 25- year loan can be obtained at 11% . There is no prepayment penalty on the mortgage balance of the original loan, but five points will be charged on the new loan other closing costs will be OMR 3,000.

a. Should the borrower refinance if he plans to be in the home for the remaining loan term? Assume the homeowner borrows only an amount equal to the outstanding balance of the loan .

b. Would your answer to part (a) change if he planned to be in the home for only five more years? why?

Reference no: EM131521120

Questions Cloud

What is the optimal time to cut the timber : Suppose the value of timber grows according to the following exponential function. What is the optimal time (t*) to cut the timber?

Future-present value tables in text showing your calculation : For each of the following questions please use the Future/Present Value tables in the text showing your calculations.

The market rate of interest on the loan : At what price should the builder sell the homes to earn , in effect, the market rate of interest on the loan?

Discuss the ways that the atlantic slave trade developed : Discuss the ways that the Atlantic slave trade developed and the role of explorers, traders, and elites in creating the system.

Amount equal to the outstanding balance of the loan : Assume the homeowner borrows only an amount equal to the outstanding balance of the loan .

Calculate the absolute value of the price elasticity : In response to a price decrease from $27 to $22, sales quantity increases 13,200 to 14,800. Calculate the absolute value of the price elasticity of demand.

The multiplicity of the african-american experience : Describe specific elements of the works from the chosen artists that represent the multiplicity of the African-American experience.

What are the two major categories of long-term assets : WorldCom committed the largest fraud in U.S. history. What was the primary method WorldCom's management used to carry out the fraud?

Why do we record land and land improvements separately : Little King acquires land and an old building across the street from Northwestern State University. Little King intends to remove the old building and build.

User Account

All Pages