You Have Just Obtained a $150,000 10-Year 6% Fixed-Rate Mortgage

question 56

Essay

You have just obtained a $150,000 10-year 6% fixed-rate mortgage.The mortgage is amortized over 25 years.The interest rate is compounded semi-annually and you make monthly payments at the end of each month.
Immediately after you signed the paperwork, mortgage rates dropped to 5%.Your bank has offered you the opportunity to renegotiate the mortgage for a penalty of $10,000.Should you take this opportunity? Assume your opportunity cost equals the mortgage rate.

---

Definitions:

Immanent Justice

Piaget’s concept of the childhood expectation that if a rule is broken, punishment will be meted out immediately.

Moral Development

The process through which individuals learn to distinguish right from wrong, and to develop values and ethical behavior.

Math Abilities

Concerns the capacity to understand and apply mathematical concepts, ranging from basic arithmetic to complex problem-solving.

Mental Rotation

The cognitive ability to rotate mental representations of two-dimensional and three-dimensional objects.