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What is the new refinancing monthly payment

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A borrower obtained a fully amortizing loan 1 0 years ago for $600,000 at 12% p.a. for 30 years. Mortgage rates have dropped, so that a fully amortizing 20-year loan can be obtained at 11%. The early repayment (exit cost) and other refinancing costs will be $5,000.

i) What is the current monthly payment and current total outstanding balance?

ii) What is the new refinancing monthly payment?

iii) What is the difference between current monthly payment and new monthly payment (savings)?

iv) Should the borrower refinance?

Reference no: EM132693057

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