A borrower made a mortgage loan five years ago for $275,000 at 7.50% interest for 30 years, monthly payments. The loan balance is now $260,198 and rates for this amount are currently 6.0% for 25 years. Origination fees and closing costs are $2,000 and closing costs are not financed by the lender. What is the effective cost of refinancing? 

1. A homeowner made a mortgage loan ten years ago for $225,000 at 9.0% for 30 years. Today the rate on 20-year mortgages is 7.75%. To refinance, the borrower discovers that financing fees would be $3,200. What is the return on the investment if the borrower plans to stay in the house for the next 20 years? The borrower plans to refinance the current outstanding balance.