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.

Decision Factors Example Your Figures 1. Current monthly payment $908 __________ 2. New monthly payment 827 __________ 3. Monthly savings (line 1 line 2) 81 __________ 4. Additional years you expect to live in the house 4 __________ 5. Future value of an account balance after 4 years if the monthly savings were invested at 3% after taxes (using the calculator on the Garman/Forgue companion website) 4,175 __________ 6. Prepayment penalty on current loan (0%) 0 __________ 7. Points and fees for new loan (2%) 2,842 __________ 8. Future value of an account balance after 4 years if the prepayment penalty and closing costs ($4,263) had been invested instead at 3% after taxes (using the calculator on the Garman/Forgue companion website) 3,198 __________ 9. Net saving after 48 months (line 5 line 8) $977 __________