Consider a 25-year, $200,000 mortgage with a rate of 6.6 percent. Three years into the mortgage, rates have fallen to 5.3 percent. Suppose the transaction cost of obtaining a new mortgage is $2,200.

a. Should the homeowner refinance at the lower rate?

multiple choice

• Yes

• No

b. Quantify the effect of the homeowner's decision. (Do not round intermediate calculations. Round your answer to 2 decimal places.)