Mortgage Refinancing

A step-by-step procedure for evaluating mortgage refinancing is illustrated. The method is also used to show the effects of changes in marginal tax rates, opportunity discount rates, mortgage rates, and the age of the mortgage on the decision to refinance.     

The Derivation of Simple Formulas for Comparing Investment Alternatives With and Without Load and Account Fees

Loads and account fees reduce the terminal value of an investment. For this reason accounts that are subject to fees and loads have to earn higher returns than no-fee, no-load accounts to generate the same terminal value over a given investment horizon. This article develops simple formulas that can be used to perform “what if’ calculations important in developing financial plans. The formulas show that the amount by which the return on a fee, load account has to exceed the return on a no-fee, noload account diminishes as the fees and loads get smaller, the investment horizon gets longer, and the size of the current investment gets larger.