Posted on: 06th Jan, 2011 07:49 am
i still owe 32,000 on my house bought in 1999. it is on a 30yr 6.25% interest. my current payment is 565. a month. i can afford to pay 1000. or even up to 1400. a month.
would it be better ( save money) to refinance ( w/ current rates) and switch to a higher payment less year loan (even w/ all the fees for refinancing)? or would it be better to just pay more each month on current loan?
would it be better ( save money) to refinance ( w/ current rates) and switch to a higher payment less year loan (even w/ all the fees for refinancing)? or would it be better to just pay more each month on current loan?
Hi Lora,
Compared to your present interest rate, the mortgage rates are going quite low. If you're planning to stay in the property for the next few years, then you can refinance the mortgage for a shorter term period. This will help you in paying off the loan faster and you'll be able to own the property free and clear within few years.
Compared to your present interest rate, the mortgage rates are going quite low. If you're planning to stay in the property for the next few years, then you can refinance the mortgage for a shorter term period. This will help you in paying off the loan faster and you'll be able to own the property free and clear within few years.
You should check into a 15 year FRM or better yet a 10 year FRM. If your credit is good, you can probably get a rate right now of 4.00% to 4.50% with low closing costs. Your monthly payment would be considerably lower and you could quickly accelerate the loan payoff by making extra payments.
If you have a $32,000 loan at 6.25% presently and you voluntarily pay $1,000 a month in principal and interest, the loan is paid off in 36 months.
If you voluntarily pay $1,400 in monthly principal and itereest, it pays off in 25 months.
It makes absolutely no sense at all to refinance. Just pay extra if that is waht you want to do.
If you voluntarily pay $1,400 in monthly principal and itereest, it pays off in 25 months.
It makes absolutely no sense at all to refinance. Just pay extra if that is waht you want to do.
If you save 2% on $32k, you save $640/year.
You'd never save enough to offset the transaction fees of a refinance if you can pay the principal off that quickly.
You'd never save enough to offset the transaction fees of a refinance if you can pay the principal off that quickly.
I somehow missed the loan amount being only $32,000 (my bad - probably registered as $132,000 when I first read it). If it was $132,000 and you had 29 more years to go at a 30 year fixed rate of 6.25%, then it would have made sense to consider a refinance.
From what I now can gather is your original loan was only around $92,000 which would be close for monthly P&I of $565. If that's the case, you have been making some substantial extra payments already as you're now closer to year 24 on the amortization table than year 11 when you first took out the loan. Just keep on keeping on.
From what I now can gather is your original loan was only around $92,000 which would be close for monthly P&I of $565. If that's the case, you have been making some substantial extra payments already as you're now closer to year 24 on the amortization table than year 11 when you first took out the loan. Just keep on keeping on.