Question: Consider a 2 0 - year, $ 1 7 5 , 0 0 0 mortgage with a rate of 6 . 4 5 percent. Five

Consider a 20-year, $175,000 mortgage with a rate of 6.45 percent. Five years into the mortgage, rates have fallen to 5.15 percent. Suppose the transaction cost of obtaining a new mortgage is $1,850.
a. Should the homeowner refinance at the lower rate?
Yes
No
b. Quantify the effect of the homeowner's decision.
Note: Do not round intermedlate calculations. Round your answer to 2 decimal places.
Monthly savings
Consider a 2 0 - year, $ 1 7 5 , 0 0 0 mortgage

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