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Assume that you chose the 80% LTV mortgage but after 10 years are thinking about refinancing for $5,000. You will only be in the home

Assume that you chose the 80% LTV mortgage  but after 10 years are thinking about refinancing for $5,000. You will only be in the home for another 5 years. The new loan would be an ARM. Interest rates on 20-year ARMS are currently 6%. Interest rates are expected to increase to 7% in years 2 and 3 and then to 8% in years 4 and 5. 


Find the return on your $5,000 refinancing cost. 


Should you refinance?

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