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At what level of refinancing costs financially indifferent

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Question - An individual took a loan of $300,000 to buy a house. The loan carried an annual interest of 5.9% and was for 30 years. After 12 years, interest rates came down and the borrower is thinking of refinancing the mortgage for the remaining 18 years at an annual rate of 4.2%. If the home owner refinances, what will be the new monthly payments? If the cost associated with the refinancing is $6,000, would you recommend refinancing? At what level of refinancing costs are you financially indifferent? How much are you willing to pay in refinancing costs to take on the new mortgage?

Reference no: EM132945246

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