What is the net benefit (loss) of the borrower’s decision to refinance today given the following information and that she intends to move in 5 years? How long will it take you to breakeven assuming you take the refinance using the same discount rate ?
Current loan closing costs:
New loan type: 15-year fixed rate
Current loan original balance: $350,000
New loan interest: 5.00%
Current loan balance: $263,993.63
New loan total fees: 2.5 points
Current loan interest rate: 7.5%
Individual discount rate: 6%
Current loan payment: $2,447.25
Income Tax Rate: 10%