Why refinancing usually makes thing worse.

1. “The True Cost of Your Mortgage Debt”
Part Two
Why Refinancing Usually Makes Things Worse.

2. The bank is definitely on the winning end of your
home loan.
That much is clear.

3. Who is on the winning end
when you refinance?

4. Let’s say 5 years into your mortgage,
you refinance your loan to 4.5%.

5. Your new monthly payment is $942.99,
$250 less than your previous payment.

6. Your new monthly payment is $942.99,
$250 less than your previous payment.
You are saving money, paying less interest
and taking care of your family.

7. Your new monthly payment is $942.99,
$250 less than your previous payment.
You are saving money, paying less interest
and taking care of your family.
So far so good.

8. But what interest rate are we really paying
on our 4.5% loan?

9. 82%

10. But don’t forget...

11. But don’t forget...
...you already paid $58,055 interest on your first loan.
Equity Int. Paid Total Paid
Year 5 $13,891 $58,055 $71,946

12. But don’t forget...
...you already paid $58,055 interest on your first loan.
Equity Int. Paid Total Paid
Year 5 $13,891 $58,055 $71,946
(for less than $14,000 in equity mind you)

13. $153,367.40 new loan interest
+ $58,055.00 old loan interest

14. $153,367.40 new loan interest
+ $58,055.00 old loan interest
= $211,422.40 total interest

15. $153,367.40 new loan interest
+ $58,055.00 old loan interest
= $211,422.40 total interest
114%

16. You also paid several thousand dollars to do the
refinance.
$4,000 +/- refi costs.

17. Not to mention,

18. Not to mention,
you are now starting over at month 1
of a new 30 year loan...

19. ...building equity by less than $1 a month.
Equity/You Interest/Bank
Month 1 $245.08 $697.91
Month 2 $246.00 $696.99
Month 3 $246.92 $696.07
Month 4 $247.85 $695.14
Month 5 $248.78 $694.21
Month 6 $249.71 $693.28

20. You also kicked your retirement another 30 years down
the road...

21. ...and instead of paying off your home by the age of 60,

22. ...and instead of paying off your home by the age of 60,
you’ll be 65.

23. ...and instead of paying off your home by the age of 60,
you’ll be 65.
But that’s only if you never refinance again.

24. Not to pour salt on the wound but...

25. Not to pour salt on the wound but...
most of us refinance several times,

26. Not to pour salt on the wound but...
most of us refinance several times,
and use our new home loans to pay off credit cards,
auto loans and other consumer debts.

27. Is it any wonder that banks love home loans and
refinancing?

28. Let’s review.
Your new 4.5% loan saves:
$250 +/- month
$20,250 +/- interest

29. Let’s review.
But it costs:
$211,422.40
114%
$4,000 +/- refi costs
an additional 5 years of debt

30. You are saving money and paying less
interest,

31. You are saving money and paying less
interest,
but you aren’t any closer to financial
freedom.

32. In fact, you’re further than ever.

33. Imagine...

38. ...financial freedom.

39. Next:
“The True Cost of Your Mortgage Debt”
Part Three
How To Save Money Without Refinancing
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