Refinance & Home Equity: compare the full cost.
Compare the existing loan with the proposed loan over the same time horizon.
Start with the decision.
A lower payment can result from extending the term rather than lowering the economic cost. Review fees, lender credits, financed costs, remaining balances, and the period you expect to keep the loan. Treat a simple payment break-even as an opening question, then review the complete comparison with a qualified mortgage professional.
Basics: your learning sequence.
1. Record the existing loan. 2. Obtain proposed loan terms. 3. Separate fees, prepaids, and credits. 4. Compare equal holding periods and remaining balances. 5. Review the result with a qualified mortgage professional.
Blindspots: questions to answer early.
Is the lower payment caused by a longer term? Are costs financed? How do remaining balances compare at the same future date? What happens if you move before a payment-only break-even?