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# Finance Written Assignment Anna Koudriachova

Name_____________
Section ____________
MATH-1030-351-807-F17

This assignment is a little different than the previous ones, because this one is fairly
computational. This question is more like the homework questions.

This assignment is one big question with 13 parts - each part builds on the previous part. The
assignment is set up so you can see the previous and later parts of the assignment, but can submit
one part at a time.

The assignment is set up like the skills test, with 3 attempts, and 30% penalty per missed
attempt. However, after the last attempt, the answer will be available via the "Show Answer"
button so you can complete the remainder of the assignment.

## Total Points Possible: 20

Question 1
\$130,000 paying 10% as a down
Suppose that 10 years ago you bought a home for \$__________,
7 interest for 30 years.
payment, and financing the rest at ___%
Your existing mortgage (the one you got 10 years ago)
How much money did you pay as your down payment?

\$ 13,000.00

Question 2.
How much money was your existing mortgage (loan) for?

\$ 117,000.00

Question 3.

\$ 778.40

Question 4.
How much total interest will you pay over the life of the existing loan?

\$ 163,224.00

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Question 5.
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.
100,400.00 left to pay on your loan. Your house is now valued at
You see that you still have \$____________
180,000.00
\$___________.

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.)

\$ 16,600.00

Question 6.
How much money have you paid to the loan company so far (over the last 10 years)?

\$93,408.00

Question 7.
How much interest have you paid so far (over the last 10 years)?

\$ 76,808.00

Question 8.
How much equity do you have in your home (equity is value minus remaining debt)

\$ 79,600.00

Question 9. Refinancing

Since interest rates have dropped, you consider refinancing your mortgage at a lower ___% rate.

If you took out a new 30 year mortgage at ___% for your remaining loan balance, what would

\$ 601.95

Question 10.
How much interest will you pay over the life of the new loan?

\$ 116,302.00

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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?

176.45
\$

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)

\$ 193,110.00

Question 13.
Now the non-computational question: Does it make sense to refinance? (There isn't a correct

The answer to this question depends on your reasons for refinancing. If you want to lower your
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monthly payment, refinancing under this scenario is definitely the way to go because your monthly
payment would be lowered by \$176.48.
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Next thing to consider is that you will be in debt for 10 years longer than if you were to keep the
original loan. You will also be paying \$29,855.20 more in interest if you were to refinance the loan.
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The lower interest rate will cost almost \$30,000.00.
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If you are thinking about refinancing, it would make sense to take out a 15 year loan instead of a 30
year loan, if you are able to afford the monthly payments.
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Regardless of the loan, you should try to pay more than just the minimum monthly payment to pay off
the loan faster.
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