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Fees today with funds from her savings account

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Question: Evelyn took out a 30-year mortgage (monthly payments) for £130,000 at 8.3% and payment number 35 is due today. She is deciding whether she should refinance the outstanding principal by borrowing at today's lower rate of 6.3% an amount that just pays off the old loan. The new loan is for 30 years as of today. The total fees for getting the new loan equal 3.2% of the borrowed principal, and Evelyn will pay the fees today with funds from her savings account.

  1. How much would she save in terms of monthly payments if she refinances?
  2. How much does she save in today's dollars? What is the PV of her savings?

Reference no: EM131752718

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