Case Study:
Refinance with Debt Consolidation
When a client looks at a higher mortgage interest rate in isolation, a valuable refinance opportunity can easily stall. This cash-out refinance scenario illustrates how LoanGizmo helps you break down a complex, multi-layered debt situation into a clear financial roadmap.
The Client Profile
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Borrower: Ms. Sue Borrower (Approaching Retirement)
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Property: $750,000 Current Value | $425,000 Existing Balance
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Current Terms: 30-Year Fixed at 4.00% (5 Years Into Amortization)
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Target Debt to Consolidate: $40,000 Total High-Interest Revolving Debt
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Card 1: $18,000 Balance @ 26.00% APR ($450/mo minimum)
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Card 2: $13,000 Balance @ 24.00% APR ($270/mo minimum)
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Card 3: $9,000 Balance @ 28.00% APR ($200/mo minimum)
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Total Current Monthly Debt Service (Cards Only): $920/mo
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Timeline: Transitioning to retirement with a plan to sell in 8 years (with a strong possibility of accelerating to 6 years).
The Financial Dilemma
Sue needs to eliminate $920 in monthly credit card payments before she retires. However, she is highly anxious about trading her current 4.00% mortgage rate for a 7.50% baseline refinance rate, absorbing $20,000 in total closing costs, and resetting her loan clock back to 30 years. She is also considering paying discount points to lower her long-term overhead:
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Option A: Pay 1.00% in discount points for a 7.125% interest rate.
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Option B: Pay 2.00% in discount points for a 6.875% interest rate.
While she sees a net monthly savings of roughly $500 across her household budget, she cannot figure out if the $20,000 friction cost and the lost amortization equity from the last 5 years will wipe out those savings over her short 6-to-8-year horizon.
The Manual Hurdle
To solve this manually, a Loan Officer must calculate a blended interest rate across four distinct liabilities, model three competing mortgage amortization schedules starting from year zero, calculate the lost equity from resetting the current loan, and run parallel break-even analyses for both a 72-month and a 96-month exit window. Doing this manually takes hours of tedious spreadsheet building—time stripped away from originating new business—and still leaves the client with a confusing wall of numbers.
The LoanGizmo Solution
LoanGizmo transforms this analytical mountain into a 5-minute visual consultation. By inputting Sue's current liabilities alongside the new refinance structures, the platform instantly cross-compares her current trajectory against the new options.
The generated client-facing report perfectly isolates her net wealth position at both the 6-year and 8-year marks. It clearly illustrates whether the immediate $920/month cash-flow relief and accelerated debt elimination outweigh the $20,000 closing costs and interest rate hike before she sells. Instead of guessing, you provide Sue with the data-driven confidence she needs to secure her retirement, positioning yourself as an elite wealth advisor rather than just another lender.