Comments on: How to Remortgage http://www.nodebtplan.net/2009/07/07/how-to-remortgage/#utm_source=rss&utm_medium=rss&utm_campaign=how-to-remortgage A personal finance blog teaching you how to live debt free and use credit wisely. Fri, 10 Feb 2012 15:18:07 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Lizhttp://www.nodebtplan.net/2009/07/07/how-to-remortgage/#comment-24823 Liz Tue, 07 Jul 2009 16:51:54 +0000 http://www.nodebtplan.net/?p=3263#comment-24823 Just wanted to point out something that's a pet peeve of mine in the refinance world. I've refinanced my mortage many times, and each time the salesperson talks about "how long I'll be in the home." However, that's not really the important point. The important point is "how long I'll have the mortgage." If, like me, your mortgages have an average life of 2 years, it doesn't matter if you stay in your house 10 years, you might still end up with a bad deal. Also, there are several ways to calculate your "break-even" time (the time at which the monthly savings offsets your closing costs). A more conservative approach considers the after-tax savings on interest, which results in a longer break-even. A still more conservative approach compares the difference between using that $5,000 to pay down your current mortgage, rather than using it to refinance into a new mortgage. I considered refinancing recently, but did the calculations and determined I was far better off just prepaying my mortgage instead. Saved me time AND money! Here is a site that has multiple break-even calculations: http://www.dinkytown.net/java/MortgageRefinance.html Just wanted to point out something that’s a pet peeve of mine in the refinance world. I’ve refinanced my mortage many times, and each time the salesperson talks about “how long I’ll be in the home.” However, that’s not really the important point. The important point is “how long I’ll have the mortgage.” If, like me, your mortgages have an average life of 2 years, it doesn’t matter if you stay in your house 10 years, you might still end up with a bad deal.

Also, there are several ways to calculate your “break-even” time (the time at which the monthly savings offsets your closing costs). A more conservative approach considers the after-tax savings on interest, which results in a longer break-even. A still more conservative approach compares the difference between using that $5,000 to pay down your current mortgage, rather than using it to refinance into a new mortgage.

I considered refinancing recently, but did the calculations and determined I was far better off just prepaying my mortgage instead. Saved me time AND money!

Here is a site that has multiple break-even calculations:
http://www.dinkytown.net/java/MortgageRefinance.html

]]>