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The Jones' old $47,000, 30 year, 12.8% mortgage has a monthly payment of $512.58. Over the 6 years since they took the loan, mortgage rates dropped. They can now apply for a mortgage at 9.05%, which will result in a new monthly payment of $369.36. To refinance, they must pay $1,020 in closing costs and a $480 prepayment penalty. Find the net amount they will save in the first year.

Respuesta :

The net amount that will be saved by the Jones for the first year will be $814.32.

How to calculate the net amount?

From the information given, the old mortgage yearly payment will be:

= Monthly payment × Months

= $259.32 × 12

= $3111.84

The new monthly yearly payment will be:

= Monthly payment × Months

= $327.18 × 12

= $3926.16

Therefore, the net amount that will be saved will be:

= $3926.16 - $3111.84

= $814.32

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