[quote=harvey][quote=bewildering]My first refi was to 4.0%, but the rates that day were 3.9%. [/quote]
So your “no cost” loan cost you 0.1%
There are scenarios where one can come out slightly ahead in cash flow if they take a “no cost” loan and pay if off before the full term. But then there is the opportunity cost of paying off a low-rate, long-term loan early, which the “pay off my mortgage early” crowd always ignores.
And any mortgage broker claiming that a loan is “no cost” is just plain misleading…[/quote]
There are facts and there are opinions.
The FACTS are simple:
1. A no cost loan IS a no cost loan, it’s not misleading and can be explained properly.
2. It’s always better to have a lower interest rate on any debt.
The problem is that most people don’t understand the options associated with NO COST refinancing and turn a beneficial refi into a worse situation.
You completely misunderstood (and twisted) what bewildering said.
Based on facts, I can make 100% guarantees about future payments, projections and cash flow if people listen to explanations and follow through.
There are multiple ways to benefit from a refi and if one only makes the minimum payment and resets the term to 30 years, it may not be a better loan.
HOWEVER, this is a choice by the borrower.
Refinancing to a lower rate at no cost is ALWAYS a better situation for the borrower. There is no payback period or spreadsheet required.
The confusion is that most people don’t get a proper explanation about the choices of benefits
and financial ‘experts’ like Suzie Orman & Dave Ramsey that many people listened to never seemed to
understand these benefits & choices either and gave crappy advice about mortgages & refinancing.
To say that there is no such thing as a no cost loan is just 100% WRONG and on $400K-$500K loans, interest savings of $30,000-$50,000 or more over the life of the loan are very possible, depending on the difference in rate (at absolutely ZERO cost)
