# Suppose a homeowner purchased a home for \$100,000, with 100% financing at 5 percent for 10 years. Payments are made yearly at the end of each year. It seems to me that the yearly payments would be \$12,950(to the nearest dollar).

Suppose a homeowner purchased a home for \$100,000, with 100% financing at 5 percent for 10 years. Payments are made yearly at the end of each year. It seems to me that the yearly payments would be \$12,950(to the nearest dollar).
After one year, the homeowner will still owe a principal of \$90,931 if I did it correctly.
Refinancing the principal at 4% for 9 years will save how much in raw dollars over the final 9 years?

\$5,133

0

\$12,380

\$111,421

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