Refinancing Your Mortgage

Ready to test your knowledge? You'll have ten multiple choice questions to answer. Click on each question to reveal the question and multiple choice answers. After you've completed answering all ten questions, click "Grade Me!" at the end of the quiz to see how you did.

Question 1

As a rule of thumb, how many percentage points lower should your new mortgage rate be for a refinance to save you money?

(A) 2.0%	Correct Incorrect
(B) 0.5%	Correct Incorrect
(C) 1.0%	Correct Incorrect
(D) 3.0%	Correct Incorrect

Question 2

The "loan-to-value" ratio for a mortgage refinance is based on:

(A) The original loan amount and the current appraised value of your home.	Correct Incorrect
(B) The current outstanding loan balance and the current appraised value of the home.	Correct Incorrect
(C) The current outstanding loan balance and the purchase price of the home.	Correct Incorrect
(D) Loan-to-values are not calculated when refinancing a mortgage.	Correct Incorrect

Question 3

Which of the following is the most popular reason for refinancing a home mortgage?

(A) Lowering monthly payment	Correct Incorrect
(B) Shortening the loan term	Correct Incorrect
(C) Taking cash out, as an alternative to a home equity loan.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Question 4

If you have PMI on your existing mortgage, refinancing into a new mortgage can remove it if:

(A) You've been current on all of your loan payments since you first purchased the home.	Correct Incorrect
(B) The loan balance on your refinanced loan is less than or equal to 80% of the home's current value.	Correct Incorrect
(C) Your new rate is 2.0% lower than your current rate.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Question 5

Which of the following SHOULD NOT be done in preparation for refinancing your mortgage?

(A) Make sure your credit report and credit score are in good shape.	Correct Incorrect
(B) Build up your cash reserves	Correct Incorrect
(C) Gather all of the required paperwork.	Correct Incorrect
(D) Stop making your mortgage payments during the refinance process.	Correct Incorrect

Question 6

Which of the following IS NOT a requirement to be eligible for the Home Affordable Refinance Program (HARP)?

(A) The borrower must be current on the mortgage at the time of the refinance, with a good payment history in the past 12 months.	Correct Incorrect
(B) The mortgage must be owned or guaranteed by Freddie Mac or Fannie Mae.	Correct Incorrect
(C) The current loan-to-value (LTV) ratio must be greater than 80%.	Correct Incorrect
(D) The borrower must be six months behind or less on their mortgage payments at the time of the refinance.	Correct Incorrect

Question 7

When is refinancing your mortgage not a good idea?

(A) You've had your mortgage for a long time.	Correct Incorrect
(B) Your current mortgage has a prepayment penalty.	Correct Incorrect
(C) You plan to move from your home in the next few years.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Question 8

Most "no closing costs" refinancing offers:

(A) Allow you to not pay any closing costs out of pocket by adding the actual closing costs to your loan balance.	Correct Incorrect
(B) Mortgage refinances don't have closing costs so they're simple marketing ploys.	Correct Incorrect
(C) Some lenders absorb closing costs in order to attract customers.	Correct Incorrect
(D) None of the above.	Correct Incorrect

Question 9

If you want to shorten the length of your existing mortgage loan, you can:

(A) Refinancing into a shorter term loan.	Correct Incorrect
(B) Making occasional lump-sum payments to your lender.	Correct Incorrect
(C) Switching to a bi-weekly payment schedule.	Correct Incorrect
(D) All of the above.	Correct Incorrect

Question 10

You might want to consider refinancing into a higher rate loan if:

(A) You change from an Adjustable Rate to a Fixed Rate to gain stable rates for the remainder of the loan term.	Correct Incorrect
(B) You want to accelerate the payoff of your loan.	Correct Incorrect
(C) You get to finance your closing costs as part of the refinancing program.	Correct Incorrect
(D) All of the above.	Correct Incorrect

	Correct	Incorrect
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Refinancing Your Mortgage