Dividing closing costs by payment savings says a 20-year refinance needs 1,101 months to pay off; tracking balances as well, this MT431 Unit 5 break-even analysis finds 16. Searches like "mt 431 unit 5 assignment example", "mt431 unit 5 sample" and "mt431 unit 5 example" land here.
What a finished MT431 Unit 5 refinance break-even analysis looks like
Five pages and a script appendix. The opening table restates the existing loan: $304,000 borrowed in late 2023 at 7.375 percent, a $2,099.65 payment, 34 payments made. Two refinance options sit beside it, each with $5,940 of closing costs paid in cash: a new 30-year loan at 6.125 percent with a $1,794.17 payment, and a 20-year loan at 5.875 percent whose $2,094.26 payment barely moves. A break-even table then gives two answers per option, the simple division and the month in which cumulative savings plus the balance difference first exceed costs. A line chart plots Lorraine's net position under each option for ten years. The closing page compares remaining lifetime payments: $684,487 on the current loan against $651,841 and $508,562 with costs included.
How a MT431 Unit 5 example is structured
The analysis argues that break-even is a question about wealth rather than the payment, and its order builds that case. It opens with the shortcut every borrower hears, costs divided by monthly savings, because the shortcut gives a sensible 19.4 months for the 30-year option and an absurd 1,101 for the 20-year one. The second measure then counts what the shortcut leaves out: a lower rate and a shorter term both reduce principal faster, so the balance owed after any month differs between loans. By month 60 the 20-year loan leaves Lorraine $18,896 ahead, against $11,882 for the 30-year reset, even though it saves almost nothing monthly. The lifetime table exposes the cost of restarting a 30-year clock, which adds 34 payments. A final section weighs cash flow, since the 30-year option frees $305 a month for other goals.
The loan being replaced
Original terms, payments made, and the $295,283 payoff balance computed at month 34 rather than copied from a statement.
The shortcut, applied twice
$5,940 divided by $305.48 gives 19.4 months; divided by $5.39 it gives 1,101 months, a result the paper treats as a warning sign.
Break-even with balances
Month-by-month net position counting cumulative savings, closing costs and the gap between old and new balances, reaching zero at months 20 and 16.
Restarting the clock
The 30-year option's extra 34 payments priced against its lower rate, still leaving $32,646 of lifetime savings after costs.
Cash flow or equity
Which option suits a borrower who needs monthly room and which suits one who wants the house paid off before retirement.
Where marks go in MT431 Unit 5
Payment savings reported with no month at which costs are recovered leave a grader unable to judge whether the refinance pays at all, and that omission is among the most often penalized in this unit. The simple formula is accepted widely, but a paper that applies it to a term-shortening option and reports a break-even of decades without comment shows the method was used without thought. Credit also depends on handling the term reset: comparing a new 30-year payment with the old one, without noting the added years, overstates the benefit. Closing costs should be stated in full, including whether they are paid in cash or financed, since rolling them into the balance changes both figures. Stronger papers finish on the borrower's expected stay and goals rather than on a single number.
Get a MT431 Unit 5 example written to your instructions
Current loan terms, payments already made and each refinance quote in the Unit 5 materials are the inputs; add the rubric and the free first analysis follows within 24-48h. Both the shortcut and the balance-aware break-even appear for every option, and the whole calculation runs by script so any month's figure can be checked.
MT431 Unit 5 questions, answered
What is the simple refinance break-even formula?
Closing costs divided by the monthly payment saving gives the number of months needed to recover those costs. It works reasonably when the new loan has a similar term. It fails when the term shortens, because payments may barely fall while principal drops much faster. Tracking the balance on both loans month by month gives a more reliable answer.
Does refinancing into a new 30-year loan cost more in the end?
It can, because the borrower restarts a full term and pays interest for longer. Whether it does depends on the rate reduction and how long the loan is kept. In the sample, the lower rate still saves $32,646 over the remaining life despite 34 added payments. Compare total remaining payments, including closing costs, before concluding either way.
Should closing costs be paid in cash or rolled into the MT431 case loan?
Both are common. Paying cash keeps the balance lower; rolling costs in preserves savings but adds interest on the financed amount. The break-even calculation must reflect whichever the case assumes, since a financed $5,940 raises both the new payment and the balance. Check whether the prompt specifies, and state the assumption at the top of the analysis.