Richard CanfieldPodcast Host and IBC Advisor, Ascendant Financial · Authorized Infinite Banking Practitioner | Author of 4 Books

Refinancing's Endless Loop

18 Apr 2024 · 1 min

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Richard Canfield (speaker) explains the cyclical nature of refinancing: borrowers may extend amortization but keep shorter loan terms, requiring renegotiation when circumstances change. Life events (e.g., having another child) often prompt refinancing or selling and buying a larger home, which resets the loan lifecycle and its highest payment-volume period back to the first payment of the new loan.

Chapters

The amortization is longer, but we have a shorter term. And then we have to renegotiate what the term is going forward. So now all of a sudden you're renegotiating and maybe you're increasing or you're refinancing, or you're selling the property and going buying a new one because you had another child, you've increased the size of the family, you need a bigger house. These are the common trends that we see happening for people. And so we're never necessarily getting ahead of this because we're going to go get a brand new place or refinance, and then we start over again at the very beginning of that loan, and we start right back at square one, where the highest volume is starting again on that very first payment.