LATEST SPREADSHEET CORNER ARTICLE:
CI Mortgage Refinance Calculator
April 18, 2015
Nowadays, while interest rates are low, many individuals contemplate refinancing their mortgage. But with refinancing comes costs. Some homeowners are considered “refinance junkies” and continually jump from one low interest rate to the next, but these individuals may not factor refinancing costs into the total benefit associated with a lower interest rate.
There are several different goals when refinancing a mortgage. A majority of homeowners seek to reduce their interest expense, but there are others who appreciate the ability to extend the term of the mortgage, effectively reducing their periodic payment. On the other hand, individuals may seek to lower their loan repayment period if they are in a position to afford a higher periodic payment. Another goal might be to consolidate debt. If you have an initial mortgage as well as a home equity loan, combining the two mortgages into one may level out the payments and simplify the repayment process.
Much of the analysis presented on mortgage refinancing stresses the fact that an individual should only refinance if they plan on being in their home for a while. This is because homeowners are urged to consider how many months of lower payments it will take to recoup the closing costs of the new mortgage. Individuals should also evaluate how long they intend to stay in a particular home in order to estimate the principal balance when it comes time to sell the property and compare that with what the balance will be if the mortgage is refinanced.
The CI Mortgage Refinance Calculator is meant to be a simple illustration of how refinancing your mortgage could affect your cash flow, whether positive or negative. This is a topic that has many intricate and elaborate caveats, and we advise that you consult a mortgage professional before making any decisions.
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