Posted on: 10th Feb, 2012 05:52 pm
I have 22 years left on a 30 year loan at 5.875 I still owe 108,000. I can refi for a new 4.7 , 30 year loan. Should I do it or would I be making a mistake by extending it... I plan on keeping the home for at least 15 more years... also what if I make extra principle payments each month with the money I would save by extending to the new 30 year loan.. is this the right thing to do or should I leave the loan the way it is. Can someone help me out.? Thank you
hi guest,
if you plan to keep the home for 15 more years, then it will be a good option to refinance the existing mortgage at a new low rate. as you will be staying in the property for a long period of time, it will help you in offsetting the money that you pay as closing costs at the time of refinance. if you make extra payments toward the principal amount, you will be able to pay off your loan faster.
thanks
if you plan to keep the home for 15 more years, then it will be a good option to refinance the existing mortgage at a new low rate. as you will be staying in the property for a long period of time, it will help you in offsetting the money that you pay as closing costs at the time of refinance. if you make extra payments toward the principal amount, you will be able to pay off your loan faster.
thanks
It was me above... just forgot to login!!
So going back up to 30 year is better? Won't I end up paying more interest and lose the years I've payed ? The house is a rental if that makes any difference. Thanks for your help and time.. Having a hard time understanding and don't wanna make a mistake.
Welcome youngman,
If you are planning to stay in the property for a long period of time, you can go for 30 year loan. However, it is true that a 15 year loan would have been a better option for you. But if you go for a 15 year loan, you may had to pay a higher interest rate on that loan and your payments would have increased.
If you are planning to stay in the property for a long period of time, you can go for 30 year loan. However, it is true that a 15 year loan would have been a better option for you. But if you go for a 15 year loan, you may had to pay a higher interest rate on that loan and your payments would have increased.
If you have a $108,000 balance at 5.875% and that willl be paid off in 264 months, you are paying now in monthly principal and interest $729.
After another 180 months the balance will be $50,160
If you refinance $108,000 at 4.7% for 30 years, your monthly required payment will be $560.13.
After 180 months the balance will be $72,250
That payment is $169 a month less than what you pay now.
If you save $169 a month for 180 months in a savings account, the balance will be $30,420.
If you made a lump sum payment toward your mortgage of $30,420 the balance would be $41,830.
That is $8,330 better than just paying the existing mortgage for another 15 years.
So, it is fine to refinance if you "save" the $169 a month.
If you refinance at 4.7% and voluntarily pay monthly what you pay now, $729.76, even though only required to pay $560.13, the balance after 180 ponths would be $28,028.
This option is definitely worth doing and saves the most money, net affect after yoiu sell after 180 months.
After another 180 months the balance will be $50,160
If you refinance $108,000 at 4.7% for 30 years, your monthly required payment will be $560.13.
After 180 months the balance will be $72,250
That payment is $169 a month less than what you pay now.
If you save $169 a month for 180 months in a savings account, the balance will be $30,420.
If you made a lump sum payment toward your mortgage of $30,420 the balance would be $41,830.
That is $8,330 better than just paying the existing mortgage for another 15 years.
So, it is fine to refinance if you "save" the $169 a month.
If you refinance at 4.7% and voluntarily pay monthly what you pay now, $729.76, even though only required to pay $560.13, the balance after 180 ponths would be $28,028.
This option is definitely worth doing and saves the most money, net affect after yoiu sell after 180 months.
Thank you guy for your help.
You're welcome.
Good luck
Good luck