# *Precision *Financial Calculator

#### Example 3-1 __Mortgage payment and refinance__

Mrs. Gibson bought a house two years ago. Excluding tax and insurance fees,
she is paying the mortgage $1,359.25 each month for the initial mortgage amount
of $136,000 and at the interest rate of 8.75%. The term of the mortgage is 15
years. For the tax purpose, she needs to know the total interests she paid during
the second year. Now the current interest rate has dropped to 7.125%. If she
refinances the loan at this new rate, how much will she save from the monthly
mortgage payment?

**[Answer: Total interests paid in the second year = $11,300; $117.32 (the
dfference between $1,359.25 and $1231.93) ]**

**[Procedures]**

On the Loan calculation tab, type in 136,000 for the loan amount, 180 for
the number of the months, 8.75 for the interest rate. Click the Calc button,
you get the monthly payment of $1,359.25. From the Payment Schedule table, click
and drag the mouse pointer from Interest column row 13 to row 24. You will get
the sum of the interest paid for the second year. Now change the interest rate
to 7.125 then click the Calc button again. You get the new monthly payment of
$1231.93. Check Example 3-3 for the effective interest rate if she needs to
pay an up front fee for the refinancing.

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