An investor obtained a fully amortizing mortgage 4 years ago for $100,000 at 12 percent for 30 years. Mortgage rates have dropped so that a fully amortizing 25-year loan can be obtained at 10 percent. There is no prepayment penalty on the mortgage balance of the original loan, but 3 points will be charged on the new loan and other closing costs will be $2000. All payments are monthly.

Explain whether or not it would be financially beneficial for the investor to refinance if the plan is to own the property for the remaining loan term. Assume that the investor refinances an amount equal to the outstanding balance of the loan. Use your calculation(s) as evidence to support your conclusion, and explain how you arrived at the calculation(s) you include.