Assume a variable rate mortgage of 500,000 with j 12 = 4%, amortized over 25 years with monthly payment. The term is 5 years. Now 2 years into the term, the borrower is thinking of refinancing it. How much would be the refinancing costs?

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Amortized Loans

The term "amortization" refers to spreading the value of a loan or a debt over a series of regular payments or installments comprising of both the principal and interest amount. It generally involves the process where in the value of a loan or an intangible asset is written down over its maturity period.