Tom Falkland is considering refinancing his home mortgage to reduce his house payment by $175 per month. Closing costs associated with the refinancing will total $6,000. Tom will finish medical school in three years, at which time he will sell the house and move to another state.

Required

a. What is the payback period for refinancing this loan?

b. Given Tom’s plans, should he refinance his mortgage at this time? Why or why not?