Suppose a homeowner is reluctant to refinance until he is reasonably sure that interest rates are not going to fall appreciably from where they currently are. In this case, the homeowner appears to be concerned about which of the following costs associated with refinancing?

Question

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The homeowner's reluctance to refinance until he is reasonably sure that interest rates are not going to fall appreciably implies that he is concerned about the potential opportunity cost of refinancing. If he refinances at current rates and then interest rates fall in the future, he may miss out on the opportunity to refinance again at even lower rates, which could result in significant savings on his mortgage.

Suppose a Homeowner Is Reluctant to Refinance Until He Is