The net benefit of the borrower decision to refinance

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Reference no: EM131553847

1. What is the net benefit (loss) of the borrower’s decision to refinance today given the following information and that she intends to move in 5 years?

Current loan closing costs: 2 points New loan type: 15-year fixed rate

Current loan original balance: $350,000 New loan interest: 5.00%

Current loan balance: $263,993.63 New loan total fees: 2.5 points

Current loan interest rate: 7.5% Individual discount rate: 6%

Current loan payment: $2,447.25 Income Tax Rate: 10%

a. $11,461.06

b. $13,321.16

c. $18,601.03

d. $23,495.89

None of the above

2. How long will it take you to breakeven assuming you take the refinance in question 1 using the same discount rate?

a. 28 months

b. 29 months

c. 30 months

d. 31 months

None of the above

Reference no: EM131553847

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