“This is so very wrong,” wrote leading personal finance adviser Suze Orman last week. She was blogging about what she considers a major error being made by homeowners currently arranging mortgage refinances.

Her point should be of more than passing interest to local homeowners contemplating their own St. Cloud refinances. With Freddie Mac’s Chief Economist confirming that “rates remain near record lows,” it reemphasizes how St. Cloud refinance rates are creating bargains many local homeowners are finding hard to resist. Moneywise.com chimed in last week, noting how 30-year fixed-rate mortgages “are more than an entire percentage point below where they were last year at this time.” It was also how mortgage data firm Black Knight could calculate that 16.3 million U.S. mortgage holders could “save nearly $3,400 per year by refinancing at today’s rates.”

So, what prompted Ms. Orman to send up the red flag—the “huge mistake” that most mortgage refinancers make?

Her point was aimed at the natural inclination to replace a higher-interest 30-year mortgage with another 30-year loan at the lower rate—a simple choice that can inadvertently result in much higher interest costs. St. Cloud homeowners who refinance after a few years of paying down their original mortgage wind up extending the payments by an equal number years if they sign up for another 30-year term. The monthly payments will reflect notable savings in the monthly cash flow—but the seemingly economical move will ring up a higher total interest paid. According to Orman, by the time the mortgage is paid in full, that total can be “much higher.”

Her rule of thumb is to adjust the term of the refi to “never extend your total payback period past 30 years.” The monthly payment will be higher—but will still reflect the savings realized by today’s low rates. Another plus: shorter-term loans carry lower rates.

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