Reference no: EM133069624

Betty and Mark Harris are refinancing their home to take advantage of falling mortgage rates. Their current rate is 7.50 percent on a 30-year conventional mortgage, originated four years ago in the amount of $137,800. They have two options for refinancing: First, for a $265 fee, their current lender (Bank A) is willing to reduce their rate to 6.00 percent on a new 30-year conventional mortgage with no points as long as they don't increase the amount of their loan. Their only closing costs will be an updated appraisal and title insurance certificate, for a total of $530. The Harriss' second option is to take out a conventional loan with Bank B, which is offering 5.00 percent with 1 point. This lender's application fee is $265, and appraisal and credit report fees total $318. Bank B will allow them to finance the remaining balance on their loan plus an additional $15,900, and some of this can be used to pay their closing costs so that they will have no up-front costs.