Posted on: 27th Apr, 2009 07:12 am
Hi All,
I'm currently in year 12 of a 30 year mortgage on a rental property. I financed $96K at 7.5%. I plan on retiring in 2020. I want the house paid off when I retire. Here's my question. Do I refinance the existing $82K loan balance with a 10 year mortgage or should I just pay a little more each month in addition to my regular payment to have it paid off in 2020?
Thanks!
I'm currently in year 12 of a 30 year mortgage on a rental property. I financed $96K at 7.5%. I plan on retiring in 2020. I want the house paid off when I retire. Here's my question. Do I refinance the existing $82K loan balance with a 10 year mortgage or should I just pay a little more each month in addition to my regular payment to have it paid off in 2020?
Thanks!
it's hard to answer which one is the better option - refinance or pay extra, because we don't know what kind of deal you're going to get if you choose to refinance. prepaying will negate most of the interest costs you'll ordinarily incur if you were to keep the existing mortgage. on a whim, i'd say that prepaying is the way to go.
The smaller the mortgage amount, the tougher it is to save money by refinancing. Investor property rates are not all that great because lenders price them rather adversely these days.
Not knowing at what rate you could refinance, and if you did it should be a ten or eleven year mortgage, I can tell you what to pay extra.
If you could get a ten year mortgage and pay all the costs out of your pocket, the required monthly payment at 6.00% for a mortgage of $78,374 would be $870.11.
If your mortgage started at $96,000 at 7.50% your required monthly principal and interest payment is $671.25. After 12.5 years (150 months) your balance would be $78,374.90. If you want to pay that off in 11 years (132 months), pay $202 extra every month, which would be total $873.25
Not knowing at what rate you could refinance, and if you did it should be a ten or eleven year mortgage, I can tell you what to pay extra.
If you could get a ten year mortgage and pay all the costs out of your pocket, the required monthly payment at 6.00% for a mortgage of $78,374 would be $870.11.
If your mortgage started at $96,000 at 7.50% your required monthly principal and interest payment is $671.25. After 12.5 years (150 months) your balance would be $78,374.90. If you want to pay that off in 11 years (132 months), pay $202 extra every month, which would be total $873.25
setting up a biweekly payment plan? If you have 18 years left on your mortgage a biweekly plan should reduce that down to where you can have it paid off by 2020 and you would have to bump your mortgage up to a 10 year term and lose any cash flow that you may have.
Call your lender and ask if it is available... if not, check out a company like GemCap and don't pay over $400 or so to set it up.
You can try to do it yourself, IF you are a strict disciplinarian. Otherwise, it will be hard to do it every month for 12 years.
Best of luck!
Call your lender and ask if it is available... if not, check out a company like GemCap and don't pay over $400 or so to set it up.
You can try to do it yourself, IF you are a strict disciplinarian. Otherwise, it will be hard to do it every month for 12 years.
Best of luck!
Your first move would be to try to get your lender to modify your interest rate. I wrote a letter to my lender in such a way that they agreed to reduce my rate by almost a full point. They only charged me a fee of $600 to do it.
Should I refinance or pay extra towards loan???
Our current rate is 5.375 on a 30 year note. we owe 280,000. Our monthly payment on at is 1679. (We have been paying 1800/month). We have an opportunity to refinance into a 15 year loan at 4.6 with 0 points. (We can afford the extra payment)
What makes sense? Should we stick with our original loan and just pay the amount ($2157) we would be paying on the 15 year note to the original note?
We plan on staying in the house for a very long time.
Our current rate is 5.375 on a 30 year note. we owe 280,000. Our monthly payment on at is 1679. (We have been paying 1800/month). We have an opportunity to refinance into a 15 year loan at 4.6 with 0 points. (We can afford the extra payment)
What makes sense? Should we stick with our original loan and just pay the amount ($2157) we would be paying on the 15 year note to the original note?
We plan on staying in the house for a very long time.
Hi kbissing,
Rates are quite low these days. So it is good option to refinance the loan at a lower rate. You have mentioned that you will be able to afford the extra payments after refinance. Thus, in my opinion refinancing the 30 year mortgage into a 15 year will be a good idea. Also if will help you in paying off the debts quite early and owning the house free and clear.
Thanks
Rates are quite low these days. So it is good option to refinance the loan at a lower rate. You have mentioned that you will be able to afford the extra payments after refinance. Thus, in my opinion refinancing the 30 year mortgage into a 15 year will be a good idea. Also if will help you in paying off the debts quite early and owning the house free and clear.
Thanks
I have 24 years to go on a 30 year mortgage. My interest rate is 5.75. I can refinance at 4.5 with roughly 3500 in closing costs on a 15 year loan. Should I refinance or pay extra toward the principle? I am wondering if it will work out the same, and save my self the closing costs. I plan on staying in the house for atleast 5 more years but not the whole 24 years. I also plan on remodeling and renting it. My loan balance is 76, 300.
pogonogo i would think you'd be able to get an even lower rate with minimally more in costs...you'll still probably get your money back.
i am in a 30 year mortgage@ 1161.58dollars per month. i have beinging paying the loan for five and a half years now. i an on a bi-weekly program which will help me paid off the loan in 23 years. i have a second mortgage for 25000(interest loan), i had for a years ans a half now. my first loan rate is 6%. the second is 8%.is it wise for me to refinance at4.8%for 30 years and conbine the two loans together at a payement of 1,145.00 per month or for 20 years @1,342.00.
Hi Guest,
I feel it would be a good option to refinance both the loans at a rate of 4.8% for 30 years. You will be liable for only one mortgage payments that too at a lower interest rate. However, you should remember that you would be liable for the closing costs as well as other related costs when you refinance the loan. If you're planning to stay in the property for a longer period of time i.e. for 8-10 years, then you would be able to offset the closing cost and it would be a good idea to refinance.
Thanks
I feel it would be a good option to refinance both the loans at a rate of 4.8% for 30 years. You will be liable for only one mortgage payments that too at a lower interest rate. However, you should remember that you would be liable for the closing costs as well as other related costs when you refinance the loan. If you're planning to stay in the property for a longer period of time i.e. for 8-10 years, then you would be able to offset the closing cost and it would be a good idea to refinance.
Thanks
I owe $153,000 at 5.875% & have 282 $1,005 / month payments left on a 30 year mortgage. I could refinance for 20 years reducing the number of payments to 240, but increasing monthly payments to $1,030 / month.
I have been able to pay $5,000 extra a year on the principle & will continue to do so. With the ability to pay extra does it make sense to pay $3,200 in closing cost or just keep paying on the principle?
I have been able to pay $5,000 extra a year on the principle & will continue to do so. With the ability to pay extra does it make sense to pay $3,200 in closing cost or just keep paying on the principle?
kbissing
If you refinance $280,000 to 15 fixed at 4.625%, your monthly payment is $2,159 and over 15 years you pay $388,620.
If you want to pay off the present mortgage at $280,000 at 5.375% in 15 years you pay every month $2,269 and over 15 years you will have paid $408,420.
By refinancing you save $19,800 over 15 years (minus closing costs)
If you voluntarily pay the same on the present mortgage as you would on the new mortgage, you would pay $2,159 and that would pay off in 16.25 years or 15 months longer than the new 15 year would.
You decide if the $19,000 in savings over 15 years is worth it to you.
If you refinance $280,000 to 15 fixed at 4.625%, your monthly payment is $2,159 and over 15 years you pay $388,620.
If you want to pay off the present mortgage at $280,000 at 5.375% in 15 years you pay every month $2,269 and over 15 years you will have paid $408,420.
By refinancing you save $19,800 over 15 years (minus closing costs)
If you voluntarily pay the same on the present mortgage as you would on the new mortgage, you would pay $2,159 and that would pay off in 16.25 years or 15 months longer than the new 15 year would.
You decide if the $19,000 in savings over 15 years is worth it to you.
pogonogo
Your present mortgage payment is probably around $490 a month.
If you just pay what you are now, nothing extra, your balance after another 5 years will be about $67,750
If you refinance to $79,800 for 15 years your balance after 5 years will be $58,903, about $8,830 less. You will be paying $610 a month which is $120 a month more than you pay now. For 5 years that will be $7,200 more than you pay now. You will have saved over 5 years about $1,600.
If you voluntarily pay $610 now, which is $120 more than you now pay, the existing mortgage balance after 5 years from now will, be $59,357, about $454 more than if you refinance.
If you are going to stay there 5 years, do not refinance.
If you stay trher 16 years, you save $$7,320 becasue the new 15 year mortgage will pay off 12 months faster than if you pay $610 on the present mortgage.
If I were you, I would not refinace
Your present mortgage payment is probably around $490 a month.
If you just pay what you are now, nothing extra, your balance after another 5 years will be about $67,750
If you refinance to $79,800 for 15 years your balance after 5 years will be $58,903, about $8,830 less. You will be paying $610 a month which is $120 a month more than you pay now. For 5 years that will be $7,200 more than you pay now. You will have saved over 5 years about $1,600.
If you voluntarily pay $610 now, which is $120 more than you now pay, the existing mortgage balance after 5 years from now will, be $59,357, about $454 more than if you refinance.
If you are going to stay there 5 years, do not refinance.
If you stay trher 16 years, you save $$7,320 becasue the new 15 year mortgage will pay off 12 months faster than if you pay $610 on the present mortgage.
If I were you, I would not refinace
We purchased a condo for $222,685 and put down enough money to where the currently mortgage is at $98,278.60. We have our daughter on the title as she lives there, but recently married. She and her husband have plans to move, but want to rent out the condo space, as it has depreciated in value (it could sell today for $124,900) and it would be a loss to sell it. Does it make sense to refinance it to a lower rate, in order to rent it out and wait till the market recovers to sell it?
Ellen, I replied to your question in your other posting.