279 words - 2 pages

Five (5) years ago, you bought a house for $171,000, with a down payment of $30,000, which meant you took out a loan for $141,000. Your interest rate was 5.75% fixed. You would like to pay more on your loan. You check your bank statement and find the following information:

Escrow payment

$261.13

Principle and Interest payment

$822.84

Total Payment

$1,083.97

Current ...view middle of the document...

Decide whether or not it would be reasonable to do this if you currently meet your monthly expenses with less than $100 left over.

•(a) Explain your strategy for solving the problem.

•(b) Present a step-by-step solution of the problem.

•(c) Clearly state your answer to Part 1. What is your decision?

Part 2

Identify the highest interest rate you could refinance at in order to pay the current balance off in 20 years and determine the interest rate, to the nearest quarter point, that would require a monthly total payment that is less than your current total payment. The interest rate that you qualify for will depend, in part, on your credit rating. Also, refinancing costs you $2,000 up front in closing costs.

•(a) Explain your strategy for solving the problem.

•(b) Present a step-by-step solution of the problem.

•(c) Clearly state your answer to Part 2. What is your decision?

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