Assume the Jarretts have decided to refinance their mortgage over a 30-year term and pay the cost of refinance out of pocket. They have asked you the following: A) what will be their new payment (principal and interest only); B) how many months will it take to recoup the cost of refinancing the mortgage and C) how much more will they have to pay every month if they want the mortgage paid off when they retire?

Current 30 year fixed rate costs 4.125%

Anticipated closing costs will be 3%

Current Home Mortgage Liability: $98,836

Current annual mortgage (principal and interest) payment: $10,267

Original information - The Jarretts purchased their home six years ago for $130,000 and financed a mortgage of $104,000 with monthly payments over 30 years at 9.25%. Since they purchased the home they have gutted and remodeled a bathroom at a cost of $10,000 and painted the exterior at a cost of $3,000.