SOLUTION: This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going toward
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Question 1200569: This year (10 years after you first took out the loan), you check your loan balance. Only part of your payments have been going to pay down the loan; the rest has been going towards interest. You see that you still have $94,743 (or maybe $102,637) left to pay on your loan. Your house is now valued at $170,000. [Remember -- These questions on THIS page are to help you prepare for the actual questions that you will get -- but the VALUES might not be the same when YOU do it.]
For your current situation:
How much of the original loan have you paid off? (i.e, how much have you reduced the loan balance by? Keep in mind that interest is charged each month - it's not part of the loan balance.)
$________ [Submit your answer in MyOpenMath later]
Question 6
How much money have you paid to the loan company so far (over the last 10 years)?
$________ [Submit your answer in MyOpenMath later]
Question 7
How much interest have you paid so far (over the last 10 years)?
$________ [Submit your answer in MyOpenMath later]
Question 8
How much equity do you have in your home (equity is value minus remaining debt)
$________ [Submit your answer in MyOpenMath later]
Question 9
Refinancing
Since interest rates have dropped, you consider refinancing your mortgage at a lower 6% rate.
If you took out a new 30 year mortgage at 6% for your remaining loan balance, what would your new monthly payments be?
$________ [Submit your answer in MyOpenMath later]
Question 10
How much interest will you pay over the life of the new loan?
$________ [Submit your answer in MyOpenMath later]
Question 11
Analyzing the refinance
Notice that if you refinance, you are going to be making payments on your home for another 30 years. In addition to the 10 years you've already been paying, that's 40 years total.
How much will you save each month because of the lower monthly payment?
$________ [Submit your answer in MyOpenMath later]
Question 12
How much total interest will you be paying (consider the interest you paid over the first 10 years of your original loan as well as interest on your refinanced loan)
$________ [Submit your answer in MyOpenMath later]
Question 13
Now the non-computational question: Does it make sense (to you) to refinance? (there isn't one "right" answer to this question. Just give your opinion and your reason)
You can put this solution on YOUR website! Too many questions.
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And the $________ [Submit your answer in MyOpenMath later] is useless and irritating.
