Comments on: Beware No Cost Refinancing Offers

By: Ted Valentine

Ted Valentine — Wed, 18 Jul 2007 15:20:22 +0000

1. You don’t have to reset the loan to 30 years. You can set it at 25, 20 years, whatever. Most people do this because it gives them more cash month to month. Most people also take cash out.

2. If you want to pay the house off as cheaply as possible, the best thing to do is to refinance at a better fixed rate, pay the closing costs, and move down in term, say from a 30 to 15 year mortgage. If your income has increased since you bought the home, doing this will not likely increase your income to mortgage payment ratio.

By: jim

jim — Tue, 17 Jul 2007 16:13:08 +0000

Very true but that’s outside the scope of the article, I was just talking from a strict total cost perspective. Excellent point regardless.

By: Kent

Kent — Tue, 17 Jul 2007 15:48:15 +0000

Great post! I imagine this is a topic for another post, but the original purpose for the loan/re-fi and the “return” on the “investment” should dictate the overall value of the financing. For example, if the new loan improves cash flow by $300 per month and that money is enough to start a new business that will bring a “return” on your “investment” greater than the 7.0% you are paying on the loan, then a re-fi can be wise. It’s called leverage…