Posted on: 26th May, 2009 06:46 pm
I have a mortgage balance of 60,000 of a home woth 100000.
Current rate is 30 yr. 6.5% fixed.
I want to pay off balance within 5 years and have gotten quotes of approx 5% APR. The closing costs
are outrageous though totaling
an average of 4000. Any ideas on best way to proceed with this .
How do you compare payoffs using current 6.5% loan with refinancing
loan including all the closing costs.
Thanks for helping me make my mind up
Current rate is 30 yr. 6.5% fixed.
I want to pay off balance within 5 years and have gotten quotes of approx 5% APR. The closing costs
are outrageous though totaling
an average of 4000. Any ideas on best way to proceed with this .
How do you compare payoffs using current 6.5% loan with refinancing
loan including all the closing costs.
Thanks for helping me make my mind up
Rely
Those costs are not outrageous. In fact, they are standard. Your situation is unique. Since you are paying off the loan so fast and your loan balance is so small, you may not save too much in total interest over the life of the loan.
Those costs are not outrageous. In fact, they are standard. Your situation is unique. Since you are paying off the loan so fast and your loan balance is so small, you may not save too much in total interest over the life of the loan.
Hi rely!
Welcome to forums!
Are you planning to stay in the property for a longer period of time? If yes, then you can go for refinancing. It will help you in recovering the closing costs that you pay to your lender. However, if you are planning to stay in the property for say 2-3 years, then it won't be a good idea refinancing the property and paying the closing costs.
Feel free to ask if you have further queries.
Sussane
Welcome to forums!
Are you planning to stay in the property for a longer period of time? If yes, then you can go for refinancing. It will help you in recovering the closing costs that you pay to your lender. However, if you are planning to stay in the property for say 2-3 years, then it won't be a good idea refinancing the property and paying the closing costs.
Feel free to ask if you have further queries.
Sussane
If you are goign to refinace and want to pay it off in the next 5 years at 5% interest rate, calculate your amortization based on 5 years at 5%. That will give you the approxiamte interest you pay over 5 years at that rate ( I am saying approximate becuse, you may pay more princial at once or twice.
Now calculate the same for your loan at 6.5% for 5 years and see how much interest you pay in total over 5 years.
Now add the closing cost to your 5% interest claculation and campare it with the 6.5% interest for 5 years.
This will give you soem good sense of what is good for you.
There are lot of amortization calcualtors available on internet.
Now calculate the same for your loan at 6.5% for 5 years and see how much interest you pay in total over 5 years.
Now add the closing cost to your 5% interest claculation and campare it with the 6.5% interest for 5 years.
This will give you soem good sense of what is good for you.
There are lot of amortization calcualtors available on internet.
Quick calcultion
$60000 at 5% for 5 years you will pay $7936.47 in interest
$60000 at 6.5% for years you will pay $10899.22 in interest.
All these are approxiamte numbers.
So if your closing cost is goign to be $4000 then you are woudl be better off with your 6.5% loan and paying it off in 5 years.
$60000 at 5% for 5 years you will pay $7936.47 in interest
$60000 at 6.5% for years you will pay $10899.22 in interest.
All these are approxiamte numbers.
So if your closing cost is goign to be $4000 then you are woudl be better off with your 6.5% loan and paying it off in 5 years.