Information provided:
Mortgage= $130,000
Time = 30 years*12= 360 months
Interest rate= 8%/12= 0.6667% per month
PV= -130,000
N= 360
I/Y= 0.6667
Press the CPT key and PMT to compute the monthly payment.
The value obtained is 953.89.
Therefore, the monthly payment is $953.89.
Refinancing:
Mortgage= $130,000 – (108*$953.89)= $26,979.88.
Time = 15 years*12= 180 months
Interest rate= 7.75%/12= 0.6458% per month
PV= -$26,979.88.
N= 180
I/Y= 0.6458
Press the CPT key and PMT to compute the monthly payment.
The value obtained is 253.96.
Therefore, the new monthly payment is
$253.96.
Amount saved by refinancing= $953.89- $253.96.
=
$699.93.
Therefore, they saved $699.93 in monthly
payments.
In case of any query, kindly comment on the solution.
