Reference no: EM132902616

Question - Their mortgage on the house is $300,000. They make monthly payments of $1381.52. They purchased the house two years ago for $500,000 and their mortgage at that time was $400,000. They amortized this loan over 25 years. At that time, they took on a 3-year closed mortgage at 3.5%. They believed that interest rates were going to fall over the short term and did not want to lock into a rate for longer. Currently, a 5-year closed fixed-rate mortgage is 3.1% and a 5-year closed variable rate mortgage is 2.9%. An unsecured loan can be obtained with a fixed rate of 8%.

Other Debts:

An unsecured line of credit at a rate of 7% per year. The current balance is $14,600. They are currently paying $400 per month on average against this debt. They are frustrated because every time they pay down some of this debt, another expense comes up, and then the balance creeps back up. The credit limit on this line of credit is $15,000.

AMEX balance of $9,225 at an annual interest rate of 19%. They are currently making minimum payments of $230 on average each month. The AMEX card has a limit of $10,000.

Mastercard balance of $21,450. The credit limit is $24,000 and the annual rate of interest is 19.99%. They have been making minimum payments of $536.25 on average each month.

They have two car leases that will be expiring next year. They pay a total of $1,100 per month for the two leases. They like leasing because they enjoy having a new car every 3 years. They believe that this is the best strategy as their vehicles are always covered by warranty and they don't have to pay for any maintenance.

Buy Now - Pay Later loan that was used to purchase new furniture 18 months ago. The balance of $4,650 is due in 6-months from today. If the loan is not repaid by the due date, the financing terms will result in the application of interest charges retroactively to the loan date at an annual rate of 24%.

Required - Calculate the Total Debt including AND excluding the mortgage.