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How do I Save Money Refinancing my Mortgage

What that actually does to your monthly savings is more complex, because your mortgage bill includes principal repayment as well as interest, and only the interest is deductible. Interest shrinks as a proportion of the bill over time. But you could certainly shave maybe 25% off the overall savings as a very crude starting point to see a more realistic number.

The second problem? The total savings figure also ignores the time value of money.
Thanks to inflation, those dollars are going to be worth a lot less by the time you get hold of them than they would be today. Even if inflation only averages 2.5% a year, which is incredibly optimistic, a dollar in 30 years' time will only be worth 50 cents in today's money.

And that's not all. That figure also ignores the magic of compound interest.

Refinancing costs money. And that money, if you invested it instead of spending it on refinancing fees, could earn you a very good return. Especially over a long time period like 30 years.

Imagine your refinancing costs would be a fairly typical $2,000. If you socked that money away at just 5%, by 2039 you'd have $8,600

Hipotecas Prestamos August 19, 2009 08:17 AM