An investor is considering refinancing a property. The current mortgage has an interest rate of 8.75 percent and a mortgage balance equal to 45 percent 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 percent of the property value. He has found out that the property can be refinanced at a 75 percent loan-to-value ratio for 9.5 percent interest over 15 years. 

What can be said about the incremental cost of refinancing?

Answer rating: 100% (QA)

i The incremental cost of refinancing can be assessed by comparing the costs of the new loan with th... View the full answer