CFP Practice Test 13
10 free CFP practice questions in the real exam format, covering the official content areas, with an explanation for every answer.
Question 1 of 10
General Principles of Financial PlanningScenario: Brooke and Chloe
Brooke and Chloe, both 41, are a married couple with stable salaries. Their mortgage has a $280,000 balance at 7.25% with 25 years (300 payments) remaining. Their lender offers two refinance options on the $280,000 balance, each with $6,000 of closing costs they would pay in cash.
They also have $10,000 in cash beyond a three-month emergency fund, an $8,000 credit card balance at 22% APR, and no other debt. They expect to stay in the home at least 10 years. Chloe wants to be mortgage-free before 65; Brooke prefers the lowest payment.
| Loan | Rate | Term | Monthly P&I |
|---|---|---|---|
| Current loan | 7.25% | 25 years remaining | $2,024 |
| Refinance option 1 | 6.00% | 30 years | $1,679 |
| Refinance option 2 | 5.75% | 20 years | Not yet calculated |
If they choose refinance option 1, how many months will it take for the payment savings to recover the closing costs (rounded up to the next whole month)?