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A borrower has secured a 30 year, $120,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a 15-year mortgage

A borrower has secured a 30 year, $120,000 loan at 7%. Fifteen years later, the borrower has the opportunity to refinance with a 15-year mortgage at 6%. The cost of refinancing which will be paid upfront in cash is $5,000. a) Should the borrower refinance? b) Should the borrower refinance if s/he expects to remain in the home only 5 years?

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