Posted on: 19th Oct, 2009 11:12 am
I have 10 yrs to go on a 15 yr, 5.25% fixed rate mortage. Loan amt was $176K. Current bal is $132K. I also have a 15 yr HELOC with a variable 2.5% and bal of $29K.
Does it make sense to refi a 15 yr mortgage? The calculators I've found don't show the bottom line.
Does it make sense to refi a 15 yr mortgage? The calculators I've found don't show the bottom line.
What would your goal in refinancing the 1st mortgage be?
probably does not make much sense to refinance.
if you started 15 year at $176,000 mortgage at 5.25% your required monthly p & i is $1,414.82
right now an interest only payment on the heloc is about $60 monthly.
if you refinance and combine the two and cover $6,000 in closing costs and prepaids (just to pick a number for example). your new mortgage would be $167,000 for 15 years. you should be able to do better than a 4.75% interest rate right now, but, i'll use 4.75% as an example.
monthly p & i for a new 15 year mortgage of $167,000 at 4.75% would be $1,298.98. for 180 payments you would pay $233,816.
presently on the first and second mortgage you pay monthly $1,474.82. if you voluntarily pay $1,474.82 on the new mortgage (same as you pay now), the new mortgage would pay off in 151 months for a total of $222,423.
your present mortgage has 120 months left at $1,4141.82 monthly and total payments will be $169,778. if we make believe you pay off $29,000 heloc in 15 years at 2.5% you pay $34,740. between the two you pay $204,000 in total which is $18,423 more than you pay now over the next 15 years.
the only reason to refinance would be to lower your monthly payment by $176 a month if that is more important to you than what you pay over the life of a new loan.
the heloc is not going to stay at 2.5% when inflation kicks in and the priome ratre rises. no idea when or how fast that happens but it will take a while to "lose" $18,000 over the next 15 years in my calculation "assuming" 15 year pay off at 2.5%.
probabaly makes most sense to keep what you have and make as much extra payments on the 2.5% heloc as you can so the balance is as small as possible when inflation kicks in and the heloc rate rises.
if you started 15 year at $176,000 mortgage at 5.25% your required monthly p & i is $1,414.82
right now an interest only payment on the heloc is about $60 monthly.
if you refinance and combine the two and cover $6,000 in closing costs and prepaids (just to pick a number for example). your new mortgage would be $167,000 for 15 years. you should be able to do better than a 4.75% interest rate right now, but, i'll use 4.75% as an example.
monthly p & i for a new 15 year mortgage of $167,000 at 4.75% would be $1,298.98. for 180 payments you would pay $233,816.
presently on the first and second mortgage you pay monthly $1,474.82. if you voluntarily pay $1,474.82 on the new mortgage (same as you pay now), the new mortgage would pay off in 151 months for a total of $222,423.
your present mortgage has 120 months left at $1,4141.82 monthly and total payments will be $169,778. if we make believe you pay off $29,000 heloc in 15 years at 2.5% you pay $34,740. between the two you pay $204,000 in total which is $18,423 more than you pay now over the next 15 years.
the only reason to refinance would be to lower your monthly payment by $176 a month if that is more important to you than what you pay over the life of a new loan.
the heloc is not going to stay at 2.5% when inflation kicks in and the priome ratre rises. no idea when or how fast that happens but it will take a while to "lose" $18,000 over the next 15 years in my calculation "assuming" 15 year pay off at 2.5%.
probabaly makes most sense to keep what you have and make as much extra payments on the 2.5% heloc as you can so the balance is as small as possible when inflation kicks in and the heloc rate rises.
Thanks much. I am paying $600/mo principal only on the HELOC and a few hundred principal only pmt every once in a while on the mortgage. I want to get both paid off as fast as I can so I can retire early. Even though my mutual funds have made a strong turnaround YTD, getting these bills paid off is a guaranteed return.
You're doing a good job--already paying extra and what you have now appears to be best to keep and not refinance