Mortgage Guide

eternal_dancing_butterfly asked:

You take out a mortgage today of $350,000 with a 25-year amortization period, a
5-year term, and a 6.25% (annual) posted mortgage interest rate. Suppose four
years from today, you decide to refinance your mortgage at a 5.50% (annual)
mortgage interest rate. Also, you would like to increase your payment frequency
from monthly to weekly. (Assume your mortgage payments are made at the end
of each month or week).
(a) What is your original monthly payment on the mortgage? (5 marks)
(b) What is the remaining balance on the mortgage after 4 years?
(c) What will be your weekly payment on the refinanced mortgage? (There
are 52 weeks in a year.
(d) Are you paying more or less on a monthly basis once you refinance your
mortgage if your discount rate is 8%, compounded annually? (Assume
that there 4.3333 weeks per month)

Question posted courtesy of: Pedro