In many Ohio mortgage refinancing situations, you may have the choice of two loan alternatives for different amounts. To compare the alternatives, you should know the cost of the additional money borrowed. Two Ohio mortgage refinancing examples are offered to illustrate this comparison.

Ohio mortgage refinancing example 1. You need to raise $20,000 from the equity in your Ohio home. Should you get a new first Ohio mortgage to replace the existing one or add a second mortgage onto the existing Ohio mortgage?

You need to calculate the cost of the $20,000 cash raised. Suppose your old Ohio mortgage has a balance of $50,000, an interest rate of 9%, and 25 years to run. A new loan of $70,000 has an interest rate of 11 % and runs for 25 years. Alternatively, you could get a second mortgage loan of $20,000 at 12% interest and keep the old loan.

First you need to calculate the monthly payments under the new first Ohio mortgage loan. By referring to a table of mortgage payments such as those found in Barron 's Mortgage Payments—available in book form at most libraries and book stores—you find the payment for a $70,000 loan at 11% and 25 years to be $686.08.

The payments on your existing loan are $419.60. Subtract the old from the new Ohio mortgage payment amount ($686.08 - 419.60 = $266.48). Now find a page in the tables where the payment for $20,000 (the additional amount of the new loan) is close to the difference in payments ($266.48).

When you find a match, look at the Ohio mortgage interest rate for that needs there may be less expensive ways to get the money. Many Ohio home equity loans do not require full payment of these fees and charges; so you should shop aggressively.

If you are refinancing to get a lower interest rate, the front-end costs of Ohio mortgage refinancing mean you must realize substantial savings in monthly payments to make the deal worthwhile. These savings come in the form of reduced monthly payments, so that you should consider how long you will likely remain in the home when considering the Ohio mortgage refinancing.