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Bill had a standard mortgage with principle of $80,000 created 5 years ago. The mortgage rate is 7%. Currently he can receive a rate of

Bill had a standard mortgage with principle of $80,000 created 5 years ago. The mortgage rate is 7%. Currently he can receive a rate of 3.8% with 2 discount points. To prepay the original mortgage, he needs to pay 3% penalty.

As a financial consultant, please help him to make a decision support your suggestion with calculation.

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