Joan bought a house for $300,000. She made a down payment of 10% and amortized the remaining amount at 3.5% compounded monthly for 25 years.
a. What is the monthly payment?
b. How much will Joan end up paying for the house if she lives there for 25 years?
c. After 15 years of making payments, what will be the remaining loan balance?
d. After 15 years of making payments, Joan considers refinancing the hous
e. If she amortizes the remaining balance at 2.1% for 5 years, her loan company will charge her $2500 in fees which will be added to the amount of the loan.
What will be her new monthly payment in this case? How much will she end up paying for the house in this case?
How much would Joan save (or lose?) by refinancing the house? Would you recommend Joan to refinance her house?