q.docx

1. Scenario: You have a $200,000 mortgage at 6% interest for 30 years. You consider refinancing to a 4.5% interest rate for 30 years with $3,000 in closing costs. Question: How long to recover closing costs with monthly savings? Answer Choices: a. 12 months b. 16 months (correct) c. 24 months d. 30...

1. Scenario: You have a $200,000 mortgage at 6% interest for 30 years. You consider refinancing to a 4.5% interest rate for 30 years with $3,000 in closing costs. Question: How long to recover closing costs with monthly savings? Answer Choices: a. 12 months b. 16 months (correct) c. 24 months d. 30 months Solution: Estimate monthly savings (e.g., $186). Divide closing costs by monthly savings (e.g., $3,000 / $186 ≈ 16 months). 2. Scenario: You have a remaining loan balance of $150,000 on your mortgage. The loan has a 3% prepayment penalty. You're considering paying off the loan early. Question: If you decide to pay off the entire loan balance, what would the amount of the prepayment penalty be? a) $3,000 (**CORRECT**) b) $1,500 c) $4,500 d) Unknown