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Lane
Lane, JD, CFP, MBA, CRPS
Category: Finance
Satisfied Customers: 10122
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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If cash flow is similar (within $20.00) what advantages do

Customer Question

If cash flow is similar (within $20.00) what advantages do you see in refinancing a loan with 18 years remaining in its term with a 10 year loan?
Submitted: 1 month ago.
Category: Finance
Expert:  Lane replied 1 month ago.

Hi Cal. My name's Lane. I can help here.

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The answer depends on your objectives. If you're trying to maximize, purely financially, you'll need to provide the interest rates, so that a Net Present Value calculation can be run.

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That's the only way to bring all the factor back to what the cash flows are worth (better said, are the least negative) to the borrower.

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With a 10 year loan, if both are standard amortizations, your possibly get to a bigger reduction in principal more quickly.... bot***** *****ne, pay less interest.

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ANd if there's a large interest rate differential (lower rate on the 10 year loan) then the 10 year refi makes even more sense.

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The closing costs, of course, have to be made up for, (offset by) the lower interest cost over time.

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If you'd like to give me the numbers (payment, interest, compounding frequency, terms, closing costs, and current balance on the existing loan) I can run the numbers for you.

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bot***** *****ne? same payment getting to a Future value of zero in 10 years, rather than 18 years, is likely to cost less interest.... it's certainly less out of pocket (unless there's a balloon)

Expert:  Lane replied 1 month ago.

Again let me know if you want me to run the numbers. (or if you have any other questions at all)

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And if you DON'T have other questions Your positive rating … (by using those the stars or faces on your screen, and then clicking “submit”) …would be appreciated!

Otherwise I receive no compensation for the work.

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Thank you,

Lane

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I hold a law degree, with concentration in Tax Law, Estate law & Corporate law, a Masters Degree, with specialization in financial accounting & tax, a BBA, and CFP & CRPS designations, as well - I’ve been providing financial, Social Security/Medicare, estate, corporate, non-profit, and tax advice, since 1986

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