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When Gustavo and Serrana bought their home, they had a 5.1% loan with monthly payments of...

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Basic Math

When Gustavo and Serrana bought their home, they had a 5.1% loanwith monthly payments of $870.60 for 30 years. After making 78monthly payments, they plan to refinance for an amount thatincludes an additional $35,000 to remodel their kitchen. They canrefinance at 4.5% compounded monthly for 25 years with refinancingcosts of $625 included with the amount refinanced.

A) Find the amount refinanced. (Round your answer to the nearestcent.)

(b) Find their new monthly payment. (Round your answer to thenearest cent.)

(c) How long will it take to pay off this new loan if they pay$1200 each month? (Round your answer up to the next wholenumber.)
payments

Answer & Explanation Solved by verified expert
3.7 Ratings (554 Votes)
The formula used to calculate the fixed monthly payment P required to fully amortize a loan of L dollars over a term of n months at a monthly interest rate of r is P L r1 rn1 rn 1 Here P r511200174000 and n3012360Therefore 87060 L 17 40001174000360 11740003601 L17400046032286263603228626 so that L 87060 400017    See Answer
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