Benjamin and Sarah Redding purchased a four-bedroom house for $170,000 in a nice family neighborhood. They were among the first families to purchase a home in this new subdivision. Sarahs parents gave Sarah and Benjamin $20,000 toward the purchase of the new home as a down payment. The mortgage payment is $1,066.52 per month. Due to prior credit problems, the couple could only secure an interest rate of 7.5%. However, their credit scores today are in the lower 700s, which is considered in the good range. The original mortgage was $152,531.47, and they have made 29 payments. Utilities range from $400500 per month. Although the original value of the house was $170,000, a recent appraisal valued the house at $149,000. The decrease in value did not leave enough equity for the Reddings to be approved for a home equity loan. If the Reddings wanted to refinance (80% of the fair market value of the home), the 3% closing costs would have to be paid at closing and not financed. Mortgage rates are 3.2% for a 15-year fixed and 4% for a 30-year fixed. Any refinancing will incur 3% of the mortgage amount as a closing cost.

Determine whether the Reddings will currently qualify to refinance their home. Is the house eligible for refinancing by a lender requiring a maximum loan-to-value ratio of 80%? How much cash would the Reddings need if they refinance?

Please show all calculations.