Posted on: 21st Feb, 2010 04:34 pm
i currently have an 80/20 mortgage on my house. i called my current lender (boa)and asked about the making homes affordable program to find out about refinancing the loan. i plan to sell the house as soon as is humanly possible, when market prices rebound enough for me to at least break even and get out - i am hoping for about 2-3 years from now.
currently the first mortgage balance is $246,510 at 6.125% rate and interest only for the next 6 years.
the current payment on this loan is $1265/mo.
the second lein has a balance of $45,456.62 at 9.625% rate and is also interest only for the next 6 years.
the current payment on this loan is $372.97/mo.
boa ran the numbers and came back to me with a 30yr fixed paying p&i on the first mortgage at 5.5% interest.
the new loan balance would be $250,000 because they are including the $3831 in closing costs to refinance, plus i will have to pay a $400 application fee.
the new proposed payment would be $1419.47/mo.
so my payment would go up, however i'd be paying less interest a month and also paying some principal. my mortgage balance would also increase by almost $4000 and i would have to come up with that $400 application fee.
now on to my question:
is it worth it for me to refinance the first mortgage under this program or would i be better off just paying down my second lein? i am having a hard time trying to run the numbers to see if this makes sense or not. i have no problem paying the higher payment.
i dont know if this is a good idea since i plan to only stay in the house for a few more years and will incur the closing cost and application fee.
any help is greatly appreciated, and if more information is needed i can supply.
thanks in advance!
rick
currently the first mortgage balance is $246,510 at 6.125% rate and interest only for the next 6 years.
the current payment on this loan is $1265/mo.
the second lein has a balance of $45,456.62 at 9.625% rate and is also interest only for the next 6 years.
the current payment on this loan is $372.97/mo.
boa ran the numbers and came back to me with a 30yr fixed paying p&i on the first mortgage at 5.5% interest.
the new loan balance would be $250,000 because they are including the $3831 in closing costs to refinance, plus i will have to pay a $400 application fee.
the new proposed payment would be $1419.47/mo.
so my payment would go up, however i'd be paying less interest a month and also paying some principal. my mortgage balance would also increase by almost $4000 and i would have to come up with that $400 application fee.
now on to my question:
is it worth it for me to refinance the first mortgage under this program or would i be better off just paying down my second lein? i am having a hard time trying to run the numbers to see if this makes sense or not. i have no problem paying the higher payment.
i dont know if this is a good idea since i plan to only stay in the house for a few more years and will incur the closing cost and application fee.
any help is greatly appreciated, and if more information is needed i can supply.
thanks in advance!
rick
Personally I don't think it is worth it. Sure you're paying P+I, but the amount of actual debt you're paying off will be very, very small on a 30 yr term. It'd take you years to regain the extra $4000 you'll be paying to refinance.
What might be a good idea though is to try and refinance both your loans into a single mortgage. This would at least save you on interest.
What might be a good idea though is to try and refinance both your loans into a single mortgage. This would at least save you on interest.
Hi Guest,
It is true that if you refinance the mortgage, you would incur closing costs and application fee. However, if you stay in the property for a longer period of time, then you would be able to offset the costs that you incur in this way. However, if you do not plan to stay in the property for a long period of time, then it doesn't make sense to refinance the loan.
It is true that if you refinance the mortgage, you would incur closing costs and application fee. However, if you stay in the property for a longer period of time, then you would be able to offset the costs that you incur in this way. However, if you do not plan to stay in the property for a long period of time, then it doesn't make sense to refinance the loan.
"Personally I don't think it is worth it. Sure you're paying P+I, but the amount of actual debt you're paying off will be very, very small on a 30 yr term. It'd take you years to regain the extra $4000 you'll be paying to refinance.
What might be a good idea though is to try and refinance both your loans into a single mortgage. This would at least save you on interest."
This is where i get confused as in 24 months on the refi I will have paid about $3000 less in interest as well as putting $6925 on the principal. Over 36 months it will be $5000 interest savings and $10400 paid on principal.
So if I look at things that way, I'm saving on interest paid, while also knocking down my principal. Still not worth it?
What might be a good idea though is to try and refinance both your loans into a single mortgage. This would at least save you on interest."
This is where i get confused as in 24 months on the refi I will have paid about $3000 less in interest as well as putting $6925 on the principal. Over 36 months it will be $5000 interest savings and $10400 paid on principal.
So if I look at things that way, I'm saving on interest paid, while also knocking down my principal. Still not worth it?