Financial Project

1. Explain how much additional money you would need to add to your monthly payment to pay off your loan in 20 years instead of 25.
The original loan is a 30 year loan in which was giving 5 years ago. This means that there is still 25 years remaining to go. The payment for the twenty-five years remaining is $706.12. The payment for 20 years at the same interest rate will be $788.03 per month, the difference per month would be $81.91 per month.
2. Explain whether or not it would be reasonable to do this is if you currently meet your monthly finance with less than $100 left over.
I personally don’t think it would be reasonable to pay the additional $81.91 a month if the monthly finance is less than $100 left over per month. I do think that whenever possible there is the opportunity to pay additional money torts the principle then that what should be done. Pay additional money torts your principle always helps out in the end by lowering the amount that you are borrowing from the creditor.
3. It might be possible to pay the current balance off in 20 years if you refinance the loan at a lower interest rate. The interest rate that you qualify for will depend, in part, on your credit rating. Identified the highest interest rate you could refinance at in order to do this and determine the interest rate that would require a monthly total payment that is less than your current total payment. Also refinancing costs you $2000 up-front in closing costs.
Your old rate is 5.75% @ 30 years, but now you qualify for an interest rate of 3.75% but there is an upfront cost of $2000.00 in closing. If you continue to make the same loan payment you will be to pay off you loan in 20 year instead of 25.
4. Explain whether it is more or less reasonable to consider refinancing your loan. In order to answer this, you need to look at different interest