You took out a 30-year mortgage (monthly payments) for 130,000 at 8.3% and payment number 35 is due today. You are deciding whether you should refinance the outstanding principal by borrowing at today's lower rate of 6.3% an amount that just pays off the old loan. The new loan is for 30 years as of today. The total fees for getting the new loan equal 3.2% of the borrowed principal, and you will pay the fees today with funds from your savings account.

1. How much would you save in terms of monthly payments if you refinance?
2. How much do you save in today's dollars? That is, what is the PV of your savings?