How To Compare Mortgages - Unique Answers

Are you looking for a unique method to compare mortgages?

How To Compare Mortgages - Two Refinance Choices

Catherine found herself in a predicament. She has been offered two refinance choices based on borrowing $120,000. Take a look at her options.

Both scenarios have benefits...

• Compare 4.5% with $3500 in mortgage closing costs
• to 5.5% with $370 in mortgage closing costs

First things first, you will want to know her property already appraised at $250,000 and she currently owes $92,700. Her goals are to take out cash and lower her interest rate.

We don't know what her current rate is so I'll take a wild guess of 6.5% which would give her a current house payment of $586. Assume all loans are 30 year fixed rate mortgages.

Whoa! I almost forget a vital piece to Catherine's puzzle. She plans to sell her house in 3 to 5 years.

Now that you have the details, here is a unique way to compare mortgages.

How To Avoid Decision Overload

As a side note, have you ever felt like you were on mortgage overload? Interest rate, loan amounts, closing costs, cash out, length of term, monthly payments... yes, it is enough to make anyone want to toss up their hands.

So take a deep breath, sit back and consider the following.

Compare Mortgage Closing Costs For Answers

Choice 1: $608 a month, $23,800 cash-out, $3500 fees

At 4.5%, her payment decreases $22 a month. But 13 years pass before she breaks even on fees.
($3500 / $22 = 13 year pay back period)

On the other hand, assuming she keeps the mortgage for 5 years, add the monthly savings to her cash-out for a bottom line of $25,120.
($22 x 5 years + $23,800 = $25,120)

Choice 2: $681 a month, $26,930 cash-out, $370 fees

At 5.5%, her payment increases $95. (Remember she took out a larger loan.) Over 5 years, she pays $5700 more in payments.
($95 x 5 years = $5700)

On the other hand, the second choice yields more cash-out because of the minimal fees. But subtracting increased payments, it gives her a bottom line of $21,230.
($26,930 - $5700 = $21,230)

Compare Mortgages To Prioritize

Which is best? Catherine would want to consider which was more important to her, more cash now or lower payments over the next 5 years.

More Readers Ask How To Compare Mortgages

Best Mortgage Advice On Buying Points - Tom asks if charging points is a gimmick.

How To Refinance and Break Even - John is trying to compare mortgages to break even.

Catherine's question can be found at How To Compare Mortgages

Finding The Help You Need For Refinancing

Refinancing Advice - Your opportunity to get down to earth refinance nuts and bolts from a mortgage insider.

Announcing Kate's Mortgage Information Planner - To save money, get your ducks in a row first.

Are you a homeowner trying to decide if Mortgage Refi is worth the cost?

How To Compare Mortgages - Interest rate, loan amounts, closing costs, cash out, length of term, monthly payments, yes it is enough to make anyone want to toss up their hands.

Real Estate Investor Loans - Three options for investors sandwiched between negative cash flow and plummeting real estate values.

Surprise, it's a barn! Is a Certificate Of Occupancy necessary for your home mortgage refinance?

Refinance With Cash Out - Where is my loan approval?

Save Money Using My Special Refinance Formula "I am a great believer in luck, and I find the harder I work that the more of it I have." --Stephen Leacock

Fresh Refinance Ideas - There are reasons why and why not to refinance promoted by the media, mortgage lenders and financial gurus. The fact is, only you can decide.

What can you do when Refinancing With Bad Credit threatens to derail your dreams?

You don't know it yet but the secrets I am about to share with you have never been explained anywhere else. Secrets To Refinancing

Low Mortgage Payments For Home Owners - Before you decide on a company, learn how to ask questions and qualify your lender.

Don't be distracted by refinancing lingo. You just need my 10 best kept secrets to Low Mortgage Payments.

Ask Kate About Refinancing - Ask a question to get an answer from Kate.

Refi Ask and Answers - A collection of refinancing questions, each with a individual answer from Kate

Return home to Get-Your-Best-Mortgage-Rate from the Refinance Collection

Didn't find what you're looking for? Here's more help!

Tip: Use this toolbar to search this site or Ask Kate for answers.

Custom Search

Bookmark And Share Compare Mortgages

Please help me spread the word. I depend on your word of mouth! Using the convenient buttons you see below, bookmark and share Compare Mortgages.

This information is made available to you as a self-help tool and is not intended to provide investment advice. All numbers are estimated and are for illustrative purposes. You are encouraged to seek personalized advice from qualified professionals regarding all personal finance issues.