Should the homeowner refinance at the lower rate

Reference no: EM133377636

Question: Consider a 30-year, $160,000 mortgage with a rate of 6.9 percent. Eight years into the mortgage, rates have fallen to 5.6 percent. Suppose the transaction cost of obtaining a new mortgage is $1,700.

a. Should the homeowner refinance at the lower rate?

b. Quantify the effect of the homeowner's decision. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Reference no: EM133377636

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