Posted on: 05th May, 2012 05:49 pm
i have a 30yr mortgage with 5.875% interest rate. the original loan amount was $85,360, i've had the loan for 8 1/2 years, and the current loan balance is $69,069. my monthly p/i payment is $504.94, and i pay $150-200 extra on the principal every month.
i have no plans to ever sale the house & i have excellent credit. so, with what the rates currently are, 3.00+ percent, should i refinance to a 15yr fixed rate or should i just stay at my current rate & continue to pay the extra toward the principal?
i have no plans to ever sale the house & i have excellent credit. so, with what the rates currently are, 3.00+ percent, should i refinance to a 15yr fixed rate or should i just stay at my current rate & continue to pay the extra toward the principal?
Welcome dvhug,
As far as I can understand, refinancing your existing mortgage to a 15 year fixed rate loan will be a good option. As you plan to stay in the property for a longer period of time, you will be able to offset the closing costs which you will have to pay due to refinancing.
As far as I can understand, refinancing your existing mortgage to a 15 year fixed rate loan will be a good option. As you plan to stay in the property for a longer period of time, you will be able to offset the closing costs which you will have to pay due to refinancing.
I am assuming you pay $175 extra monthly for the purposes of this analysis (since you pay $150 to $200 extra monthly)
Presently, at 5.875%, you must pay $504.94 and you voluntarily pay $679.94.
That will pay off in 141 months and you will have paid $95,871
If you refinance to a new loan of $73,000 (I added $4,000 for closing costs and prepaids) at 15 fixed at 3.500%, your required monthly payment will be $521.86
If you pay that for 180 months you will have paid $93,935. That is $2,000 less than what you are doing now and your would pay $158 less monthly at the same time.
If you voluntarily pay $679.94,on the new loan, same as you pay now, that would pay off in 129 months and you will have paid $87,712.
So, refinance yesterday and the decide if you want to make just the required payment or pay extra every month.
Presently, at 5.875%, you must pay $504.94 and you voluntarily pay $679.94.
That will pay off in 141 months and you will have paid $95,871
If you refinance to a new loan of $73,000 (I added $4,000 for closing costs and prepaids) at 15 fixed at 3.500%, your required monthly payment will be $521.86
If you pay that for 180 months you will have paid $93,935. That is $2,000 less than what you are doing now and your would pay $158 less monthly at the same time.
If you voluntarily pay $679.94,on the new loan, same as you pay now, that would pay off in 129 months and you will have paid $87,712.
So, refinance yesterday and the decide if you want to make just the required payment or pay extra every month.
