Five years ago, Marty purchased a house of $500,000. He borrowed a mortgage with 80% of LTV (loan to value ratio), monthly payments and the interest rate of 5% for 30 years. Marty found a new lender who will refinance the current outstanding loan balance plus all the costs associated with the new loan at 3.5% with monthly payments for 30 years. Suppose that the new lender will charge 3.5 discount points on the new loan and other refinancing costs will equal $2,000. a. What is the monthly payment for the current loan? b. What is the current outstanding loan balance? c. What is the new loan amount if he chooses to refinance? d. What is Marty's monthly payment for the new loan? e. What is the effective cost of your new loan if you hold the loan for 30 years? Do you refinance? f. If Marty wants to refinance today, at least how many years should he stay in the house (do not prepay)? Please explain Why

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