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Learning, Sharing, and Teaching => Real Estate and Landlording => Topic started by: Don Jean on October 28, 2015, 03:05:58 PM

Title: Refinance Evaluation Method
Post by: Don Jean on October 28, 2015, 03:05:58 PM
I must refinance an outstanding mortgage and I was hoping to get a second pair of eyes to evaluate my assumptions. The refinance has to take place, based on my knowledge, in order to remove someone from the deed in the State of Georgia. Regardless, my calculations show that I can potentially save serious coin by refinancing the property. By paying points and reducing the term of the loan, I believe I can reduce the total interest cost of the property.

Are there any objections to my calculations, namely the estimated savings from refinancing based on the loan estimate provided? Arguably, I could take the present value of the savings across the amortisation schedule; however, I believe the net positive is large enough to warrant action without this level of detail.

Also, I was curious how some of you seasoned mustachians go about doing these types of comparisons and what variables do you consider when doing so. As you've noticed, I'm new to the boards and eager to soak up some knowledge and elevate my financial understanding and prowess.

Thanks in advance! :)

Current Loan
Loan Amount$114,430.00
Interest Rate3.625%
Total Interest$34,084.83

New Loan
Loan Amount$111,043.59
Interest Rate2.75%
Total Interest$16,093.81

Estimated Savings
Interest Saved$17,991.02
Closing Costs($5,547.25)
Interest to Date($2,389.15)
Total Savings$10,054.62