Posted on: 21st Jun, 2010 07:22 pm
I have a 89,000 mortage at 5.75 for thrity years. I pay extra 450.00 per month to the normal 875.00 a month payment. I have reduced the principal greatly. I have an option to get a 4.00 percent loan but the closing cost seems high- around 4500.00 dollars. We are planning on remaining in the home for several years. According the figures we would save approx. 180 dollars permonth/ by 4500-- would take 24 months to break even. I would be paying 875 plus the normal extra payment of 450 per month on the new loan. Would it be best to take the 4 percent offer and pay same extra or just keep what I have. The closing cost seem to high to me. What do you think?
i am assuming this is a 15 year because there is no 30 year available at 4% with those closing costs and there is no way you would save $180/month unless you are well into your term having started with a much higher balance.
because i don't know the terms of your current mortgage, it's very difficult to answer; but, assuming you were quoted a 15 year:
on a small loan amount, closing costs will be disproportionately higher than on a higher loan amount. $4500 for a 15 year 4% rate, at your loan amount, actually sounds about right. if your ultimate goal is to pay off your mortgage, then a refinance to a shorter term at a lower rate might benefit you, it would all depend on how far into your current term you are, what your payments are, how much is going to principal now, etc. you really need someone to crunch the numbers for you and that cannot be done without more info.
it's also possible you were quoted an adjustable rate amortized over 30 years at 4%, such as a 5/1 arm and if that is the case, you should not do that. since you have the extra capital to make higher payments with the added goal of early payoff, a 15 year fixed would be your best choice, if any.
because i don't know the terms of your current mortgage, it's very difficult to answer; but, assuming you were quoted a 15 year:
on a small loan amount, closing costs will be disproportionately higher than on a higher loan amount. $4500 for a 15 year 4% rate, at your loan amount, actually sounds about right. if your ultimate goal is to pay off your mortgage, then a refinance to a shorter term at a lower rate might benefit you, it would all depend on how far into your current term you are, what your payments are, how much is going to principal now, etc. you really need someone to crunch the numbers for you and that cannot be done without more info.
it's also possible you were quoted an adjustable rate amortized over 30 years at 4%, such as a 5/1 arm and if that is the case, you should not do that. since you have the extra capital to make higher payments with the added goal of early payoff, a 15 year fixed would be your best choice, if any.