Question

You have been living in the house you bought 5 years ago for $300,000. At that time, you took out a loan for 80% of the house at a fixed rate 20-year loan at an annual stated rate of 9.0%. You have just paid off the 60th monthly payment. Interest rates have meanwhile dropped steadily to 3.5% per year, and you think it is finally time to refinance the remaining balance. But there is a catch. The fee to refinance your loan is $4,500. Should you refinance the remaining balance? How much would you save/lose if you decided to refinance?

Answer 1

No,lose $84,658.62