The refinance decision workbook

Chapter 01

Give the refinance a job

Start by naming the outcome you want the new loan to achieve.

Choose a measurable goal

You might want a different payment, a shorter repayment period, more predictable rate behavior, or access to equity. Decide which goal matters most and which tradeoff you would accept.

Compare your actual remaining loan

Use the current balance and remaining term. Comparing a new loan with the original amount of your old loan can hide the effect of years already repaid. Obtain accurate current information before deciding.

Match the time horizon

Consider how long you expect to keep the home and the mortgage. Costs paid today may not be recovered if the loan is replaced quickly. There is no assurance that rates will move in your favor later. ¹

Chapter 02

Build a meaningful break-even estimate

A simple calculation can help screen an idea. It does not tell the whole story.

Use consistent inputs

Separate actual refinance charges from escrow deposits and prepaid expenses when appropriate; do not assume every amount due is a permanently lost cost. Also consider credits and any costs added to the loan balance. Ask for a written explanation of the inputs.

Illustration, not a quote

Suppose relevant upfront refinance costs are $4,800 and the comparable monthly payment reduction is $200. The simple cash-flow break-even is $4,800 / $200 = 24 months. This arithmetic does not represent a Unity loan offer or current pricing.

Know what the shortcut omits

It does not measure differences in future balances, investment returns, taxes, changing insurance, or the total interest effect of extending the term. If charges are financed, interest on those costs matters too. Use the shortcut as a question generator, then ask for a complete comparison.

Chapter 03

Read the term and equity tradeoffs

An attractive headline can obscure how long you will be paying.

Resetting the term

A new repayment period can reduce the monthly payment while increasing the time in debt and total interest. Conversely, shortening the term can increase payment while paying the balance down faster. Compare outcomes at the same future date. ¹

Cash-out is borrowing

Equity converted to cash becomes part of a secured mortgage balance. Consider the purpose, total cost and repayment plan. If used to pay unsecured debt, the borrowing is now tied to your home; reducing the payment does not erase that risk.

Do not assume a cost disappears

A description such as no closing cost may reflect credits or costs included in the financing. Ask who pays each cost and how that choice affects the rate, balance and payment. Read the actual written terms.

• Compare the same future ownership date.
• Identify which costs are paid now and which are financed.
• Ask what balance remains under each plan.
• Decide whether reserves remain adequate.

Chapter 04

Compare first, commit second

Make the reason for the decision easy to explain.

Prepare the current-loan facts

Have the current statement, balance, rate, remaining term and mortgage insurance details available. Ask your servicer about any relevant payoff requirements; a statement balance and a payoff amount are not necessarily identical.

Request a clear comparison

Ask for the new estimated payment and upfront cash, costs added to principal, projected balance at your chosen date, and conditions that could change the proposal. Keep taxes and insurance consistent when evaluating financing savings.

Write a decision note

Record why the refinance meets your goal, its tradeoff, your expected holding period and what would cause you to reassess. You should be comfortable explaining the plan in your own words before moving forward.

Keep paying the current loan

Follow the closing team and servicer instructions. Do not stop existing payments based on a discussion or an expected funding date. Confirm how payment timing will be handled.