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Planning Intermediate: Refinancing Mortgages

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1.
The 2 percent rule suggests that homeowners should refinance when interest rates increase 2 percentage points or more.
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False. The 2 percent rule suggests that homeowners should refinance when interest rates DECREASE by 2 percentage points or more.
2.
You may want to refinance your adjustable-rate mortgage if you want to reset your mortgage's lifetime adjustment cap.
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True. When you replace your old adjustable-rate mortgage with a new one at a lower rate, you usually reset your mortgage's adjustment cap to a lower level.
3.
You can refinance your home mortgage to _______.
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All of the above. You also can refinance to lower your monthly mortgage payments.
4.
To calculate how long it will take for a refinance to break even with your current mortgage, you need to _______.
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All of the above. These are the basic steps in calculating your break-even date.
5.
Home refinancing costs may include a(n) _______.
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Property appraisal. A property appraisal is sometimes required prior to a refinancing.