If you refinance your home loan every 5 years for whatever reason, and you make the minimum payments, then you will NEVER pay off your mortgage unless you refinance for a shorter term and or pay more than the minimum payment.
I do "no cost refinances" often and I always calculate my new payment that will make sure I pay off my home 30 years from when I took out the first mortgage. Since rates have been dropping, my payments are still smaller after a refinance but I will have my house paid for 30 years after I took out my first loan.
No Cost Home Refinance
"No cost refinances" are often available if you have a large loan and some of the "lender rebate" given to the mortgage broker by the lender to process your loan is used to pay your nonrecurring closing costs. For many years, you were able to refinance as often as you wanted and some people did it every 3 months! Now the lenders have gotten a bit smarter and you have to pay a penalty if you refinance too early. For example, my current jumbo loan is at 5.75% but I have to pay a 1.6% penalty if I refinance before 3 years.
Resources
I have a friend that does all types of home loans for people in California. Like me, he works out of his home to keep expenses to a minimum but pools his loans with others doing the same so he gets great rates. Costs are passed on to us so I've yet to find a cheaper place to get my loans. Send me an email with specifics if you want details on how to contact him and live in California.
I highly recommend reading or skimming a few good books before you get started as the cost is tiny compared to what you will can save on a home mortgage with a good refinance.
How to Get the Best Home Loan, 2nd Edition by W. Frazier Bell
Mortgages For Dummies® by Eric Tyson, Ray Brown
How to Save Thousands of Dollars on Your Home Mortgage by Randy Johnson
In Conclusion
Refinancing your home mortgage can be a great way to save money and or improve your quality of life. Feel free to ask any questions on this in our discussion area for this article.
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