"There is nothing more unequal than the equal treatment of unequal people." - Thomas Jefferson

Undoubtedly, this founding father was not referring to refinancing of mortgages. But, I thought of this quote to drive home my point that not everyone who has a mortgage should refinance it. Why? Because it may not be in their best interest. They may not actually save money. Here are some factors to consider when deciding whether or not to refinance:

o What is the rate and term of your current mortgage?

o How long has your current financing be place? o What is the principle balance on your current mortgage?

o What programs are available to you? (They may not be as desirable as when you originally took out your financing.)

o What is your real goal? (getting a lower monthly payment isn't synonymous with total cost savings when you compare a new mortgage to your current one.)

For example: I recently had a past client contact me. She was convinced she had missed the refinance boat. She eagerly gave me all her information and anxiously awaited the results of my analysis.

But her mortgage was 10 years old and her principle balance relatively small. After completing her analysis it supported - mathematically speaking - that she would spend thousands of dollars more in additional interest cost, over the life of the new loan, if she refinanced. I advised her that she should not refinance.

She was shocked! "How can that be"? She chided. "My rate is at 6.50%" I went on to explain that mortgage interest is front-loaded, if you will. Meaning you pay the majority of the interest on a mortgage in the early years and less interest as time goes by...even though your monthly payment is the same. So what the analysis was comparing was the interest payment over years 11 through 30 vs. years 1 through 20 on the proposed new mortgage. The math proved that she would stick with her current loan.

Wow...I don't get paid to tell people not to refinance, but I sure do get referrals from those would-be applicants! So remember: Not every mortgage is to be refinanced and not every mortgage consultant is savvy enough to know how to do a true total cost comparison.