Posted on: 13th Sep, 2010 01:56 pm
i have a 30 year fixed loan at 5.75% that started 3 years ago at $315,000.00. we have paid it down to $292,000.00. we have been paying periodic lump sum payments annually to equal 4 monthly payments to pay down the loan faster. we pay about $5000.00 towards the principal this way every year. is it better to pay down the principal with periodic lump sums or would it be better to refinance for a 15 year loan at about 4%?
i know we can do both, but with closing costs, i was wondering if we were to choose one method to reduce the principle and length of the loan, which would be the better option in our situation.
thanks!
i know we can do both, but with closing costs, i was wondering if we were to choose one method to reduce the principle and length of the loan, which would be the better option in our situation.
thanks!
Hi gckeep!
Welcome to forums!
If you want to avoid paying the closing costs, then it would be a better option to pay a lump sum amount toward the principal and reduce the balance. However, if you can afford to pay the closing costs and want to own the property free and clear, then refinancing the mortgage for a 15 year fixed will be a good option in my opinion. You will be able to offset your closing costs if you plan to stay in the property for a longer period of time.
Feel free to ask if you've further queries.
Sussane
Welcome to forums!
If you want to avoid paying the closing costs, then it would be a better option to pay a lump sum amount toward the principal and reduce the balance. However, if you can afford to pay the closing costs and want to own the property free and clear, then refinancing the mortgage for a 15 year fixed will be a good option in my opinion. You will be able to offset your closing costs if you plan to stay in the property for a longer period of time.
Feel free to ask if you've further queries.
Sussane