Current Loan: Balance as of January 30,2016 = $203,962 Monthly payment = $1,534.

Question

Current Loan: Balance as of January 30,2016 = $203,962 Monthly payment = $1,534.36 Current interest rate = 4.25% Refinance Options for a 15yr. loan: 3.25%, paying.438 points + costs (approx. $2,400 + $924 points = $3,325 total costs) : 3.375%, paying 0 points with a $350 closing cost credit ($2,400 - $350 = $2,050 total costs) 3.3.75%, zero points or fees Required: Given the choice of the three refinance options, which one would you choose and why? (Support your answer with calculations, if necessary)

Explanation / Answer

1) High Upfront payment and high cost of 3325 $ and least interest rate

2) No upfront payment and lower cost compared to 1st option and relatively lower rates.

3) Very high interest rates

Option 2 is the best it will be most cost effective.

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