FWIW, when I refinanced a few years ago, instead of going for 30-
years, I asked to keep the payment the same. In my case, I thus
avoided extending by 5 years the time to pay off my house since I've
owned it (there were still 25 years left) by shortening it to to just
20 years.

HTH

On Jan 24, 12:41*pm, jIM <noreplysoc...[at]hotmail.com> wrote:
- quote -

Multiple the delta (difference) between the two payments for the
number of payments on the new loan.
Multiple the AMOUNT of the original payments by the delta (difference)
in the term.
Either add or subtract these two numbers, depending on whether your
increasing or decreasing the term, to get the net difference to you.

Gene E. Utterback, EA, RFC, ABA


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jIM wrote:

- quote -

Here's how I look at it. Take the new mortgage outstanding, along with
the new rate, but in the calculation, use the exact time left on your
current mortgage.
There are other ways I can certainly write a spreadsheet for, the time
value today of those extra payments 25 years hence, but my suggestion
above is 'neat' and accurate. Especially if you wish to have the
mortgage paid off in the same time.

I won't suggest looking for a 15 or 20 year loan, as you seem
comfortable that you'll be able to invest long term and get a greater
return than the rate of the mortgage. You get 4.5%, you'll be golden.
Good luck to you.
JOE

With the drop in rates on Tuesday, I took a peak at mortgage rates and
started thinking of the various ways to measure whether refinancing
made sense. I could not come up with a good measure (financially) in
some cases.

The question: Is there a way to quantify the "additional time" added
to the repayment term when refinancing?

Bought house Dec of 05
refinanced June of 06 (added 8 months to repayment terms, lowered rate
by .5%)

Currently a P&I payment of $1689.44.
original LTV of 80%, $289,900 financed at 5.75% 30 year fixed.

How do you measure the fact that a loan of the same rate (30 year
fixed) would lower the payment today, simply because I have paid down
about $3400 of principal?

If I were to refinance 30 year fixed at 4.5% or 4% the extra 3 years
I add on to my loan repayment schedule is more than enough to
compensate me because I save more than $300 each month on the
mortgage. I could easily send $12000 extra over the next 40 months to
pay the principal down and get the extra 3 years back. If I invested
the $300 I would come out even further ahead.

If I were to refinance 30 year fixed at 5%, I save more than $130 per
month on the P&I, but the added 3 years of payments (from the original
2035 payoff year). This does not appear worth the money: ($130*27*12=)
$42000 over 27 years of payments I would save.

Is there a way to quantify the "additional time" added to the
repayment term when refinancing?