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Should the borrower refinance

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Question - A borrower made a mortgage loan 5 years ago for % 100,000 at 9percent interest for 30 years (monthly payment). After 5 years, interest rates fall, and a new mortgage loan is available at 7 percent for 25 years. Suppose that the prepayment penalty of 2 percent must be paid on the existing loan, and the lender requires an origination fee of $2,500 plus $ 250 for incidental closing costs if the new loan is made. Should the borrower refinance?

Reference no: EM132813308

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