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Find what is gain from refinancing

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Reference no: EM132969468

Suppose you decide to borrow $330,000 of cash to purchase a house and take out a 20-year fixed rate mortgage that has a quoted rate of 8% per year.

(Please keep a large number of digits in the calculations below. In particular it is important to have your answers correct to the dollar.)

Problem a) What is the size of your monthly payment?

Problem b) Suppose that just after making your 60th monthly payment, mortgage rates are quoted at 6% per year for both 10-year and 30-year mortgages. Suppose you decide to refinanceusing a 30-year mortgage. What is your gain from refinancing (ignoring transactions costs)?

Reference no: EM132969468

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