An Investor Is Considering Refinancing a Property

question 32

Multiple Choice

An investor is considering refinancing a property.The current mortgage has an interest rate of 8.75% and a mortgage balance equal to 45% of the property value due to amortization of the loan and some appreciation in value.However,the investor would like to refinance at an amount equal to 75% of the property value.He has found out that the property can be refinanced at a 75% loan-to-value ratio for 9.5% interest over 15 years.What can be said about the incremental cost of refinancing?

• A)It will be higher than 9.5%
• B)It will be less than 9.5%
• C)It will be equal to 9.5%
• D)Can't tell without additional information

---

Definitions:

Acceptable Name

A name for a chemical substance that follows current nomenclature rules and is agreed upon by scientific organizations.

Compound

A substance made up of two or more different elements that are chemically bonded together in a fixed ratio.

Common Name

The simplified, non-scientific name of a chemical substance or organism that is generally known and used.

Compound

A substance made up of two or more different elements chemically bonded together in a fixed ratio.