Asked by Henrique Furtado on Jun 13, 2024
Verified
Cliff and Marcie are refinancing their 20-year mortgage of $250,000 after 10 years. They are reducing the principal amount by $50,000, but keeping the same monthly payment. If interest is 5.5% compounded quarterly, by how much will Cliff and Marcie reduce the amortization period of their mortgage?
Amortization Period
The total time period over which a loan or a mortgage is scheduled to be paid off through regular payments that cover both principal and interest.
- Master the calculation and understanding of how making extra or lump sum contributions affects the amortization period of a mortgage.
- Analyze the fiscal impact associated with various mortgage refinancing alternatives, including the diminution of the principal balance and the modification of payment terms.
Verified Answer
PL
Learning Objectives
- Master the calculation and understanding of how making extra or lump sum contributions affects the amortization period of a mortgage.
- Analyze the fiscal impact associated with various mortgage refinancing alternatives, including the diminution of the principal balance and the modification of payment terms.