Answer to Question #98608 in Finance for Maryam

Question #98608
Sarah is looking to refinance her loan because rates have gone down since she has taken the loan 5 years ago. She started with a 30-year fixed-rate mortgage of $276,000 at an annual rate of 7.30%. She has to make monthly payments. She can now get a 25-year fixed-rate loan at an annual rate of 4.30% on the remaining balance of her initial loan. This loan also requires monthly payments. In order to re-finance, Sarah will need to pay closing costs of $3,700. These costs are out of pocket and cannot be rolled into the new loan. How much will refinancing save Sarah? or What is the NPV of the refinancing decision?)
Expert's answer
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