You currently have a house payment of y1. You have been in your current house for y2 years and had an original mortgage term of y3 years. While the rate on the original mortgage is y4, current interest rates have decreased to the point where you could refinance at a rate of y5 by paying one point (1%) of the mortgage balance upfront. You have decided that, if you do refinance, you would finance the new loan at y6 years, which is the original old term minus the age of the original loan.

1. If you plan to be in the house for at least four more years, should you refinance?
2. Suppose that you did refinance and made one extra payment at the end of each of the next y6 years that is applied fully and only to principal. Exactly how many months early would the loan be paid off?
3. What concerns would you have given the above?

Y1	$1,425.05	Historical mortgage refinance rate
Y2	9.00	Age of current mortgage
Y3	20.00	Original term in years
Y4	10.250%	Historical APR of mortgage
Y5	7.50%	New mortgage refinance rate
Y6	12.00	New mortgage term is old term minus age
Y7	7.25%	New rate if pay a point