Posted on: 29th Feb, 2012 09:36 am
Have a 30yr note at 5.78% balance 336,600 on purchase value home of $550k.
Equity loan on rental property (pool added to primary home) note $40K on 15 yr at 7%. Both were obtained in 2006.
Question is it worth it in around $8K closing cost to refi (cash out $40K payoff equity) if only staying in home another 6 yrs (Kids get out high school)?
Thank you!
M
Equity loan on rental property (pool added to primary home) note $40K on 15 yr at 7%. Both were obtained in 2006.
Question is it worth it in around $8K closing cost to refi (cash out $40K payoff equity) if only staying in home another 6 yrs (Kids get out high school)?
Thank you!
M
yes, it makes sense to refinance, however, it is not possible to tell you what you save based on the info provided.
when rates are at 5.78% and 7% and the mortgage amounts total about $376,000, you should break even in 12 months or less with rates at 4.250% today
but, a few questions:
1. why would closing costs be $8,000? are you paying points?
rates are 4.250% or lower without points. no need to pay
points. maybe you are including tax escrows and mortgage interest and home insurance escrows. then $8,000 would be logical, however, those are not costs
2. if the equity loan was $40,000 six years ago, why is the balance $40,000 today? are you paying interest only?
when rates are at 5.78% and 7% and the mortgage amounts total about $376,000, you should break even in 12 months or less with rates at 4.250% today
but, a few questions:
1. why would closing costs be $8,000? are you paying points?
rates are 4.250% or lower without points. no need to pay
points. maybe you are including tax escrows and mortgage interest and home insurance escrows. then $8,000 would be logical, however, those are not costs
2. if the equity loan was $40,000 six years ago, why is the balance $40,000 today? are you paying interest only?
Thank you for your response!
1) $8k is what is showing up in the good faith quote, as fees and assoicated cost from Wells Fargo. They say they are paying around $1500 in closing coast but the $8k is rolled into the loan. This is without PMI, taxes and Ins.
2) Orginal amount 6 yrs ago was around $54K.
Is your "Break even " estimate based on 30yr or 15yr?
Thanks
1) $8k is what is showing up in the good faith quote, as fees and assoicated cost from Wells Fargo. They say they are paying around $1500 in closing coast but the $8k is rolled into the loan. This is without PMI, taxes and Ins.
2) Orginal amount 6 yrs ago was around $54K.
Is your "Break even " estimate based on 30yr or 15yr?
Thanks
what is the new rate to be?
my break even is based on 30 year fixed.
are you doing 15 year fixed?
if you do new mortgage 30 fixed at 4.25%, after 72 payments balance is about $341,230
the existing loan balances would be about $291,533 and $34,971 for a combined balance of $326,504 if you just keep the two mortgages you have now
with existing mortgages you would pay about $154,543 and $34,945 over next 72 months if you were to keep them for a total paid of about $189,488
with the new mortgage you pay monthly p&i over next 72 months about $136,224
so, you pay about $53,290 less in monthly p&i over next 72 months with the new loan and you lose in mortgage balance about $14,726 becasue the second mortgage is presently paid at 15 year amortization.
if you gain $53,920 and lose $14726, your net gain is $39,194 over 6 years or about $6,532 a year.
you should have refinanced moths ago.
my break even is based on 30 year fixed.
are you doing 15 year fixed?
if you do new mortgage 30 fixed at 4.25%, after 72 payments balance is about $341,230
the existing loan balances would be about $291,533 and $34,971 for a combined balance of $326,504 if you just keep the two mortgages you have now
with existing mortgages you would pay about $154,543 and $34,945 over next 72 months if you were to keep them for a total paid of about $189,488
with the new mortgage you pay monthly p&i over next 72 months about $136,224
so, you pay about $53,290 less in monthly p&i over next 72 months with the new loan and you lose in mortgage balance about $14,726 becasue the second mortgage is presently paid at 15 year amortization.
if you gain $53,920 and lose $14726, your net gain is $39,194 over 6 years or about $6,532 a year.
you should have refinanced moths ago.
If you're preparing to stay in the residence for many years, then it will be the best place to reportage the home loan in the reduced amount. However, in order to get a reportage, you should have value in your residence.