However, if the remaining term on the existing loan is short, expect the reverse -- the refinance benefit can be larger for a high tax bracket borrower.
When you have two mortgages, you must obtain price quotes on a new first for the amount of the balance on the existing first, and on a new second for the amount of the balance on the existing second.
You also need a quote on a new first for the amount of the balance on both existing loans.
The shorter the remaining term on your existing loans, the smaller the refinancing benefit.
With a shorter remaining term, you pay off the existing loan faster, which reduces the cost of the higher rate on that loan.
If you could consolidate both of the existing loans into a single new first mortgage at 8.125% and one point, the savings over 6 years would be even greater -- $7187.
However, the best quote you could get in today’s market on this larger first mortgage was 8.50% with one point.
Maybe you took out a home equity line of credit to finance home improvements or cover college tuition costs.
Since a home equity line of credit is typically an adjustable rate loan tied to the prime rate, the numbers are bound to fluctuate.
The tax savings on interest payments usually reduce the net benefits of refinancing.