Posted on: 11th Apr, 2009 12:52 pm
this is the result i got when i used the refinance calculator to factor refinancing my $227000 mortgage balance that was originally 5.75% to 5.00%:
"if you refinance your current 5.75% mortgage to a 5.00% mortgage, your monthly payment will decrease by $564.31 and you will pay an additional $92,278.51 in interest charges over the life of the mortgage."
my closing costs were $3000, which was added to the loan. why am i paying over $90,000 in additional interest over the life of the mortgage.
please also keep in mind that i was in an arm set to reset in 2010. in addition, my taxes are rolled up into the mortgage payment and they are about $1800 a year.
i feel like it was a mistake to refinance based on the analysis provided by this refinance calculator. thanks for your consideration, i'd appreciate some additional information.
"if you refinance your current 5.75% mortgage to a 5.00% mortgage, your monthly payment will decrease by $564.31 and you will pay an additional $92,278.51 in interest charges over the life of the mortgage."
my closing costs were $3000, which was added to the loan. why am i paying over $90,000 in additional interest over the life of the mortgage.
please also keep in mind that i was in an arm set to reset in 2010. in addition, my taxes are rolled up into the mortgage payment and they are about $1800 a year.
i feel like it was a mistake to refinance based on the analysis provided by this refinance calculator. thanks for your consideration, i'd appreciate some additional information.
Hi Jerry, thanks for your response.
I did use the calculator here on this site.
As for closing costs being added into the loan. My closing costs were a little over $3000 and although they were rolled into the loan, I don't see how that could equal an additional $90,000 in interest.
I think you make a good point about the term of the loan. Whereas, I was in a 7 yr. ARM at 5.75% set to reset in 2010, now I am in a 30 yr. fixed at 5%. It makes sense that because the term is longer with reduced payments the interest has increased. That means if I maintain the level of my payments or become more aggressive in payint the mortgage, I can hold down some of the interest.
Other facts include: My current mortgage payments (pre-refinance) are $1799. Post-refinance, the payment is lowered to $1459. But my mortgage payments include taxes, which run me about $1800 per year. So, sans taxes, my post-refinance mortgage payment is around $1250.
I would appreciate any additional information regarding this, including whether you think there was an error in the calculation. Thanks again.
I did use the calculator here on this site.
As for closing costs being added into the loan. My closing costs were a little over $3000 and although they were rolled into the loan, I don't see how that could equal an additional $90,000 in interest.
I think you make a good point about the term of the loan. Whereas, I was in a 7 yr. ARM at 5.75% set to reset in 2010, now I am in a 30 yr. fixed at 5%. It makes sense that because the term is longer with reduced payments the interest has increased. That means if I maintain the level of my payments or become more aggressive in payint the mortgage, I can hold down some of the interest.
Other facts include: My current mortgage payments (pre-refinance) are $1799. Post-refinance, the payment is lowered to $1459. But my mortgage payments include taxes, which run me about $1800 per year. So, sans taxes, my post-refinance mortgage payment is around $1250.
I would appreciate any additional information regarding this, including whether you think there was an error in the calculation. Thanks again.
Hi su_prieta,
As per the data given by you when I calculated, I got a different answer. Here's how I did the calculation:
Your monthly tax payments = 1800/12 = $150 per month
Monthly payment (sans tax) = 1799-150 = $1649
Number of years you'll be refinancing for = 30 yrs.
Closing costs (dollar amount) = $3000
Would you like to finance the closing costs? = No
This is what I found:
Your Monthly Payment will be if you Refinance = $1,218.59
Monthly Payment Reduction = $430.41
Additional interest charges over the life of the mortgage = $66,928.70
Now, if there is a huge discrepancy in the additional interest that you pay throughout the life of the loan, you should talk with the lender and ask for a full amortization schedule with the break-up of all costs. Your lender is legally bound to provide you with it.
However, if you still have any doubts, do feel free to ask. I'll be more than happy to help you. :)
Thanks,
Jerry
As per the data given by you when I calculated, I got a different answer. Here's how I did the calculation:
Your monthly tax payments = 1800/12 = $150 per month
Monthly payment (sans tax) = 1799-150 = $1649
Number of years you'll be refinancing for = 30 yrs.
Closing costs (dollar amount) = $3000
Would you like to finance the closing costs? = No
This is what I found:
Your Monthly Payment will be if you Refinance = $1,218.59
Monthly Payment Reduction = $430.41
Additional interest charges over the life of the mortgage = $66,928.70
Now, if there is a huge discrepancy in the additional interest that you pay throughout the life of the loan, you should talk with the lender and ask for a full amortization schedule with the break-up of all costs. Your lender is legally bound to provide you with it.
However, if you still have any doubts, do feel free to ask. I'll be more than happy to help you. :)
Thanks,
Jerry