2 personal finance questions pls help

The SanchezFamily Profile

The Sanchez family is your typical suburbanfamily living in Frisco, Texas. Mario and Meredith met at a Journey concertduring college and it was love at first sight. They have been married forseveral years and have two children that currently attend daycare (ages 4 and6). Mario (age 35) is a sales executive for a large insurance company and Meredith(age 28) is a part time teacher at the local community college.

The Sanchez’s want to make sure that they aretracking their expenses, meeting or exceeding important financial ratios andunderstand where they currently are in terms of assets, liabilitiesand net worth. The Sanchez’s hope that you can help them with these issues sothat they can begin looking at college funding for their children, retirementplanning and finally getting out of debt.

*NOTICE FOOTNOTES

The Sanchez’sFinancial Information:

Data provided as of 12/31/2014
Meredith's  Monthly Salary	4,500
Jewelry	3,500
401(k)  Account (His)	102,657
Dividend/Interest  Income	120
401(k)  Account (Her)	72,589
Mortgage  Payment (PITI)	1,785
Boat	14,500
Infiniti  Payment	448
2007  Jeep Patriot	7,000
Jeep  Payment	280
Harley  Payment	175
Furniture	14,300
BB  National Credit Card Payment	195
Infiniti  Loan	42,000
Sears  Credit Card Payment	200
Brokerage  Account	3,700
Cable	105
Alarm  System	39
BB  National CC	5,288
Life  Insurance	145
Internet	100
Gas	300
Cellphone	130
Mario's  Monthly Salary	6,000
Harley  Davidson	17,000
Water	80
Sears  CC	9,800
Entertainment	400
Auto  Insurance	168
Child  Care	1,200
Home  Repairs	200
2010  Infiniti E35	33,200
Groceries	500
Checking  (Joint)	2,009
Bank  CD (Joint)	3,259
Dining  Out	400
Hobbies	300
Savings  Account	5,668
Roth  IRA (H)	4,295
Club  Dues	175
Harley  Davidson Loan	14,000
Dry  Cleaning	160
Charity	350
Primary  Mortgage	180,000
Landscaping	300
Maid	500
Parking  and Tolls	45
Dividend/  Interest Reinvestment	120
Student  Loan Payment	357
Mario's  401(k) contributions[ii]	350
Student  Loans H	55,380
Meredith's  401(k) contributions	450
Cash  Savings Contribution	700
Jeep  Auto Loan	5,500
Mario's  Roth Contributions	240
Total  Taxes (FICA AND INCOME TAX)	1200
Primary  Home (VALUE)	280,754

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This is the approximate balance of the mortgage. The currentinterest rate is 6.6% and the original loan amount was for $200,000. Themortgage is a 30 year mortgage.

[ii] His employer matches 100% up to 7% of his salary.

Question:


1. Marioand Meredith feel like they will live in their home forever.They are considering refinancing their home. Mario and Meredith weretold by a mortgage broker that they would qualify for a 4.2% rate on a 15 yearor 4.6% on a 30 year mortgage. Provide an analysis showing the pros and cons ofeach decision. Remember to look at financial ratios. Remember that Marioand Meredith are very visual learners. Assume that refinance costs are $5,500and can be rolled into the new loan if needed

2. 1.      Mario and Meredith areconcerned if they have adequate insurance for their auto, home and life. Theyhave a split limit policy of $50k/$100k/$50 for liability limits and $500deductibles, but they don’t understand what this really means. Mario and Meredithalso have their home insured 100% of itsactual cash value and they have replacement cost coverage ontheir property. They would like you to explain to them what these numbers meanand provide guidance if needed.