Richard Smith of Portland, Oregon, has owned his home for 15 years and expects to live in it for five more years. He originally borrowed $105,000 at 6 percent interest for 30 years to buy the home. He still owes $65,750 on the loan. Interest rates have since fallen to 5.0 percent, and Richard is considering refinancing the loan for 15 years. He would have to pay 2 points on the new loan with no prepayment penalty on the current loan.

(a) What is Richard's current monthly payment?

(b) Calculate the monthly payment on the new loan.

(c) Advise Richard on whether he should refinance his mortgage.