Finance
A Pennsylvania borrower seeking to refinance their existing mortgage to a lower rate should be aware of the 'break-even point,' which is calculated by:
ADividing the new monthly payment by the old monthly payment
BDividing the total refinancing costs by the monthly savings to find how long until the savings recover the costs✓ Correct
CMultiplying the new rate by the loan term
DComparing the new APR to the original APR
Explanation
The break-even point = Total Refinancing Costs ÷ Monthly Savings. For example, $5,000 in closing costs ÷ $200/month savings = 25 months to break even. If the borrower plans to stay longer than 25 months, refinancing is financially beneficial. This calculation guides Pennsylvania homeowners on refinancing decisions.
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