Layla has owned her home for 12 years and expects to live in it for 5 more years. She originally borrowed $200,000 at 5% for 30 years to buy the home. She still owes $130,000 on the loan. interest rates have fallen to 4%, and Layla is reconsidering refinancing the loan for 15 years. She would have to pay 3 points on the new loan with no prepayment on the current loan.

What is Layla current monthly payment ?

Calculate monthly payment on new loan ?

Run the numbers worksheet, "When You should Refinance Your mortgage" on page 285. Show the numbers at each line. Use 3% for the investment return. Advise Layla on whether she should refinance.

Show work please