System and a method for determining whether to refinance a consumer debt instrument

Abstract

A method and system for calculating an indicator which can be used for determining whether to refinance an outstanding debt instrument (such as a mortgage) with a new debt instrument (such as another mortgage), which includes the steps of (1) determining the change in the present value of the cash flows using a set of discount factors; (2) determining the change in option values using a probabilistic model of future discount factors; and (3) determining the indicator reflecting whether refinancing is probabilistically financially advisable by comparing the change in cash flow values with the change in option values. These steps can be implemented by a computer which includes a CPU and a computer code operatively associated with the CPU. The calculated indicator or its derivative, reflecting whether refinancing is probabilistically financially advisable, can be displayed on a visual display, communicated by an audio device or used to automatically commence refinancing.

Dependencies are inferred from the claim text.