Question: REFINANCING A HOME The Martinezes are planning to refinance their home. The outstanding balance on their original loan is $150,000. Their finance company has offered them two options: Option A: A fixed-rate mortgage at an interest rate of 7.5%/year compounded monthly, payable over a 30-yr period in 360 equal monthly installments. Option B: A fixed-rate mortgage at an interest rate of 7.25%/year compounded monthly, payable over a 15-yr period in 180 equal monthly installments.
a. Find the monthly payment required to amortize each of these loans over the life of the loan.
b. if they chose the 15-yr mortgage instead of the 30-yr mortgage?