beliavsky[at]aol.com wrote:
- quote -

There are times that something pretty simple can be made complex beyond
words. It's pretty easy to add up the costs of refinancing. And any
mortgage calculator will show you the new payment (to keep apples to
apples, one should not refinance calculating a new 30 year loan, but
should do the math to pay off in the same time remaining). You then can
see how much time to break even. So to John's point, which was
important, my method offers a response. Even if the owner doesn't know
how long they'll be in the house, they can know the months to break
even, and decide from there.

There are also deals (or were, haven't looked recently) which offer no
point, no closing. I'm in my house 12 years and on the 4th mortgage,
having ridden rates down to a 5.24% 15 yr. fixed.

Joe
wwww.blog.joetaxpayer.com

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In article
<ed1883d4-089f-4c87-8f5f-c11af6d09ecc[at]b1g2000hsg.googlegroups.com> ,
beliavsky[at]aol.com wrote:

- quote -

That is all nice, but the problem is that it required knowing how
long one will live in their current house. Often, that number is
not known, or is impossible to know. From there, it boils down
to garbage in, garbage out.

-john-

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------ Misc.invest.financial-plan is a moderated newsgroup where Moderators strive
to keep the conversations on-topic for financial planning. Other posting
guidelines include a request for brevity and another for trimming posts to
which we respond. For all of the other tips and suggestions, see "FROM THE
MODERATORS: Posting to misc.invest.financial-plan", a weekly post now on the
Newsgroup.

A recent paper derives a formula to determine whether one should
refinance a mortgage.

http://papers.ssrn.com/sol3/papers.c...act_id=1010702
Optimal Mortgage Refinancing: A Closed Form Solution
SUMIT AGARWAL
Federal Reserve Bank of Chicago - Economic Research
JOHN C. DRISCOLL
Federal Reserve Board - Division of Monetary Affairs
DAVID LAIBSON
Harvard University - Department of Economics; National Bureau of
Economic Research (NBER)
March 17, 2008

The most useful parts of the paper for individual investors will be
the numerical examples and the explanation of the factors involved,
rather than the mathematical derivation.

A mortgage calculator implementing the formula is at http://zwicke.nber.org/refinance/
, and a survey of refinancing rules is at http://zwicke.nber.org/refinance/appendix.py