Question

Which borrower option is an example of refinancing? (1 point)

O Agreeing to a higher interest rate on a personal loan in exchange for lower fees
O Paying the outstanding interest on an open-ended loan
O Changing payment terms on a mortgage from five years to 10 years
O Replacing an old student loan with a new student loan that has a lower interest rate
O Raising the monthly payment amount on a student loan

Answer 1

Replacing an old student loan with a new student loan that has a lower interest rate

Step-by-step explanation:

Replacing an old student loan with a new student loan that has a lower interest rate is an example of refinancing. Refinancing involves obtaining a new loan to pay off an existing loan, usually with more favorable terms such as a lower interest rate or lower monthly payments. In this case, the borrower is replacing an old student loan with a new one that has a lower interest rate, which will result in lower overall costs and potentially lower monthly payments.