1. You currently owe $118,580.44 on your mortgage loan, with an interest rate of 6.8%. Interest rates are currently 6.2% and you are thinking about refinancing, in which case you will borrow $120,000 for 15 years. You will incur loan costs of $2,150 on the new loan (payable in cash when you get the loan). You must also pay a $3,000 prepayment penalty on the old loan for paying it off early. Calculate your real APR on the new loan, assuming you do not pay it off early.
a. 6.90%
b. 7.04%
c. 6.71%
d. 6.80%
2. Dianne and Joe got married 18 years ago and purchased a home in Monrow, Michigan, for $228,000. They now are thinking about selling their home and moving into something that requires less upkeep. Homes like theirs are currently selling for $360,000. At what average annual rate has their home increased in value?
a. 2.57%
b. 6.26%
c. 3.84%
d. 4.30%
e. 11.54%