FLU,
You are a very smart guy BUT you made the calculations incredibly complicated.
HOWEVER in the above post, you nailed the holy grail
of the benefit of refinancing that 999 people out of 1000 (or probably 9999 out of 10,000) don’t get.
1.Lower your rate at no cost
2.Do nothing other than make the same payment that you have been making.
In the example above, it saves you $45,428 over the life of the loan for doing nothing more than lowering your rate AND making the same payment.
PERIOD. END OF STORY. QED
If you don’t keep the loan the full term, you still save money in interest every single day from the first day your refi is funded.
THERE IS NO PAYBACK PERIOD, There is no amount of time to recover (with a no cost loan)
Any spreadsheets or other convoluted way of trying to figure this out OR justify the benefit is nothing more than Intellectual activity that serves no practical purpose.
IF you choose to make a lower payment, you benefit a different way (i.e. monthly cash flow)
Most financial experts, including Suzi Orman and Dave Ramsey never understood the benefits of refinancing to a lower rate at no cost or how powerful it is or how to explain it.
***For the argumentative stooges who want to claim that there’s no such thing as a no cost (FREE) loan so therefore you shouldn’t even consider doing this (because if you paid more you MIGHT get more savings) and stay in a higher rate
(or because someone is going to make money for originating their loan)
I can only say that I FEEL SORRY FOR YOU.
HLS AKA “THE TROLL”
