Refinancing. If the cost of refinancing their house is $3,860, how long would Doug and Lynn (from problem 9) have to remain in their home in order to recover the cost? (Ignore any interest on the savings in answering this question.)
Problem 9
Refinancing. Doug and Lynn bought their home three years ago. They have a mortgage payment of $601.69. Interest rates have recently fallen, and they can lower their mortgage payments to $491.31 if they refinance.
What would their annual savings be if they refinance? They are in a 15% marginal tax rate bracket. (Hint: Consider the reduction in tax savings.)