28% D Fri 10:50 PM a E Chrome File Edit View History Bookmarks People Window Hel

Question

28% D Fri 10:50 PM a E Chrome File Edit View History Bookmarks People Window Help Emelie E Peptides and Amin Acids o VA Homework 29 Math 141 (Sec x C Chegg Study I Guided Solu R5 Jialuno (Carol) Li 17 SPRI C Secure https://www.webassign.n et/web/Student/Assignment-Responses/last?dep 15580428 Apps DANCE APPRECIA. g Turnitin -1.11 points Submissions Used My Notes Five years ago, Diane secured a bank loan of $330,000 to help finance the purchase of a loft in the San Francisco Bay area. The term of the mortgage was 30 years, and the interest rate was 10% per year compounded monthly on the unpaid balance. Because the interest rate for a conventional 30-year home mortgage has now dropped to 6% per year compounded monthly, Diane is thinking of refinancing her property. (Round your answers to the nearest cent.) (a) What is Diane's current monthly mortgage payment? (b) What is Diane's current outstanding balance? (c) If Diane decides to refinance her property by securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of 6% per year compounded monthly, what will be her monthly mortgage payment? Use the rounded outstanding balance. (d) How much less would Diane's monthly mortgage payment be if she refinances? Use the rounded values from parts (a)-(c) Submit Answer 1.11/1.11 points Previous 116 Submissions Used My Notes The Martinezes are planning to refinance their home (assuming that there are no additional finance charges). The outstanding balance on their original loan is $150,000. Their finance company has offered them two options: payable over a 30-year period in 360 equal monthly installments Option A: A fixed-rate mortgage at an interest rate of 6.5% pe year compounded month

Explanation / Answer

a)Current monthly mortgage payment = bank loan/ ((1-(1+r)-n)/r)

r =0.10/12

n=30*12 =360 ( for 30 years)

mortgage payment = 330000 / ((1-(1+0.10/12)-360)(0.10/12)

                                    =$2895.9862

b) current outstanding balance = mortgage payment * ((1-(1+r)^-n)/r)

                                    r= 0.06/12 (6% /12)

                                    n =25*12 =300   ( present year, five years after)

                                                =2895.9862*((1-(1+0.06/12)300)/(0.06/12)

                                                = $449476.9363

c) securing a 30-year home mortgage loan in the amount of the current outstanding principal at the prevailing interest rate of6% per year

                                    r=0.06/12

                                    n=30*12 =360

                                    loan amount =449476.94

Monthly payment = 449476.94 / ((1-(1+0.06/12) -360)/(0.06/12))

                                    = $2694.84

=$201.15

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