Setting Goals for Your Mortgage Refinance

You probably thought doing a mortgage refinance was an end unto itself, didn't you? Well, the unplanned act leads to unplanned problems.

It is vital you think about what you want a mortgage refinance to do for you, and seriously consider how a mortgage refinance fits into your financial goals.

The Rule of 72 and Your Mortgage Refinance

The great thing about money is you can calculate how much you will have, and how much you have lost, with a simple formula and extreme accuracy. One such formula, the Rule of 72, helps determine how many years it takes for money to double – or debt to double, as the case may be in your mortgage refinance.

Using the Rule of 72 when shopping for your mortgage refinance can be very handy, especially if you do not intend on keeping the house for the rest of your life. By plugging your new rate from the mortgage refinance into the formula, you can quickly, easily, and accurately figure out exactly when you would want to sell the house or do another mortgage refinance.

How it Works

All that you have to do is divide 72 by the rate of your mortgage refinance. For instance, let's say your new rate would be 6% - just as an example – your debt would double every 12 years. However, there is a special rate you should run from if you are paying it with your mortgage refinance, but fall all over yourself if you have a chance to earn it.

When the rate on your mortgage refinance doubles, your debt doubles twice as quickly. Or at least, that is the typical way of things. For instance, a 4% rate on your mortgage refinance would cause your debt to double in 18 years, whereas 8% would double your debt in 9 years.

Logically then, 12% would work the same, and double every 6 years. However, if you were to chart it out for your mortgage refinance, you would quickly see that by doubling your debt every 6 years, the amount you owe increases much faster than any other rate. Three times as fast, to be precise.

Knowing this about your mortgage refinance and how quickly your debt would double, you are now better prepared to pick the best rate for you. However, it should be noted the Rule of 72 only works for scheduled (also known as “rip off”) loans.

Take a Step Back

First you need to look away from the whole ordeal of a mortgage refinance and think about what you want to accomplish financially. Do you need to retire in twenty years? Then it might not be such a great idea to have a mortgage refinance with high payments during that time, especially if you do not have all that you need saved up already.

It is alright to put off the final payment of your mortgage refinance until the more imperative goals have been met. After all, if you opt for a longer term, lower payment mortgage refinance, you could always sell your home later on and purchase something a little better suited to your needs later on in life – in other words, smaller and less expensive.

Be Realistic

You can not know exactly what the future holds, much less what will happen in the term of your new mortgage refinance. Your family may not be as large in the next decade, or maybe you will need to move a great distance and buy another house.

Knowing your mortgage refinance exit strategy will help you to avoid the most common financial pitfalls of your average consumer. In other words, figure out exactly what the point is to getting a mortgage refinance in the first place, and use that plan to pick the best mortgage refinance for your future goals and needs.

Prepare for the worst and hope for the best, but most importantly, make sure you do all you can to ensure that the most imperative goals are met with your mortgage refinance. The short term payment savings from a mortgage refinance are less important than long term boost to investments you can have if you use those savings intelligently.

How to Avoid a Rip Off Mortgage Refinance

When to Refinance Your Mortgage

Picking the Right Mortgage Refinance Strategy

Setting Goals for Your Mortgage Refinance

Using a Mortgage Refinance as a Retirement Tool

Real Estate News

Millions Claim Stupendous Gift!

Have You?

Click here to check it out.

Mortgage Refinance Fact Bin