3. A household purchased a house 5 years ago for $450,000. The purchase was financed with a 30 year 4% Fixed Rate loan at an LTV of 90%. The household has the option of refinancing the outstanding principal with a 10 year 3% Adjustable Rate Mortgage Loan. What are the advantages and disadvantages to the refinancing alternative? 3. A household purchased a house 5 years ago for $450,000. The purchase was financed with a 30 year 4% Fixed Rate loan at an LTV of 90%. The household has the option of refinancing the outstanding principal with a 10 year 3% Adjustable Rate Mortgage Loan. What are the advantages and disadvantages to the refinancing alternative