Originally inspired by @archgame's question.
A house is a home first, but it's also an asset with its own financial implications. Sometimes refinancing is necessary to restructure debt or solve a liquidity issues ("cash out").
This View focuses on the case of optimizing cashflow and long-term wealth building by comparing refinancing to investing the would-be closing costs in the market instead.
Note: This is a pretty conservative estimate, as it assumes you won't be investing any of the monthly savings post-refi.
🏠 Current Mortgage
First, let's gather the details of your existing mortgage. You can find this information on your latest mortgage statement or by logging into your lender's online portal. Accuracy here is key to a meaningful comparison.
📄 New Loan Offer
Now, enter the terms of the new loan you are considering. A lower interest rate is the most common reason to refinance, but the loan term and closing costs are equally important. Closing costs typically range from 2% to 6% of the loan amount.
⏳ Your Timeline & Plan
Your personal timeline and investment strategy are crucial. The length of time you plan to stay in your home determines whether you have enough time to recoup the closing costs.
See Also
For further related reading, check out:
📊 Results
New Monthly Payment
Monthly Savings
Months to Breakeven
72
Refinancing Savings
Investment Value
Which is better?
Invest
Last updated by mahmoud (v25.9.2) · View history
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