Posted on: 08th Jan, 2011 12:29 pm
i have had a 30 year mortgage on a 225,000 loan for about 1 1/2 years at 4.5%. i have about $75,000 to either put toward this loan or to put down on a refinance. i am considering either applying this amount toward this principal or refinancing. i know putting it into this loan will not change my monthly payment of $1500, which is manageable.
would it be better to put the money down on my current principal, thus lowering the term of this loan (by how many years i do not know) or to refinance? what would the difference be to refinance for a 30 year mortgage vs a 15 year mortgage? is it better to pay points initially to lower the percentage rate of a new mortgage?
thank you in advance for any helpful information.
would it be better to put the money down on my current principal, thus lowering the term of this loan (by how many years i do not know) or to refinance? what would the difference be to refinance for a 30 year mortgage vs a 15 year mortgage? is it better to pay points initially to lower the percentage rate of a new mortgage?
thank you in advance for any helpful information.
Hi JulieW,
If you're planning to stay in the property for a longer period of time, then it will be a good option for you to refinance the mortgage. However, while you refinance the mortgage, you'll be liable for paying the closing costs as well as down payment of 20%. If you can afford paying both of them, you can go ahead with mortgage refinance. If you refinance for a 30 year term period, you will have to pay off the monthly dues for 30 years in order to get rid of the dues. On the other hand, if you refinance the mortgage for 15 years term period, you'll be able to get rid of the debts within 15 years term period and own the property free and clear. However, the payments can be bit high.
Thanks
If you're planning to stay in the property for a longer period of time, then it will be a good option for you to refinance the mortgage. However, while you refinance the mortgage, you'll be liable for paying the closing costs as well as down payment of 20%. If you can afford paying both of them, you can go ahead with mortgage refinance. If you refinance for a 30 year term period, you will have to pay off the monthly dues for 30 years in order to get rid of the dues. On the other hand, if you refinance the mortgage for 15 years term period, you'll be able to get rid of the debts within 15 years term period and own the property free and clear. However, the payments can be bit high.
Thanks
If you pay down current loan by $75,000, you will have 14.41 years left with monthly principal and interest payments of $1,140.
If you get a new $145,000 fixed rate loan for 30 years the monthly P&I at 5.0% would be $778.39
A new 15 year loan of $145,000 at 4.50% would be monthly principal and interest of $1,105 which is same as you pay now.
It makes no sense to refinance for 15 year fixed loan.
That leaves two choices:
1. Pay down current loan by $75,000 and loan paid off in less than 15 years
2. Refinance new loan at $145,000 so monthly payments are smaller
You decide which is best for you. Depends on your goals.
If you get a new $145,000 fixed rate loan for 30 years the monthly P&I at 5.0% would be $778.39
A new 15 year loan of $145,000 at 4.50% would be monthly principal and interest of $1,105 which is same as you pay now.
It makes no sense to refinance for 15 year fixed loan.
That leaves two choices:
1. Pay down current loan by $75,000 and loan paid off in less than 15 years
2. Refinance new loan at $145,000 so monthly payments are smaller
You decide which is best for you. Depends on your goals.
