Five years ago, Mr. Aragon took a mortgage for $ 85,000 at 10% for 30 years, monthly amortizing. Also for this loan, there is a prepayment penalty of 3% if the loan is prepaid before 6 years. Currently the market rate is 9% on 25-year mortgages. The new loan has a 4% financing cost, $5000 of closing costs and 1 discount point.

If the borrower wants to borrow $ 120,000 instead of the outstanding balance for a term of 25 years, should he refinance?