1. Currently have a house payment of $2069.40
2. Have been in current house for 5 years.
3. Had an original mortgage term of 27 years.
4. While the rate on the original mortgage is 11.250%, current interest rates have decreased to the point where you could refinance at a rate of 7.50%.
8. I Have decided that, if I do refinance, I would refinance the new loan at 22 years, which is old term minus the age of the loan.
9. Carefully explain logic and answer each of the following questions:
If you plan to be in the house for at least four more years, should you refinance?
Suppose that you did refinance and made one extra payment at the end of each year for the next 22 years that would be fully applied to the principal. Exactly how many months early would the loan be paid off?
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