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Re-Finanace question...we had a 30 year mortgage and re-financed
Posted on 4/18/13 at 9:35 am
Posted on 4/18/13 at 9:35 am
some 10 years ago to a 15 year time period at an interest rate of 6.25%...we are paying principle and have wondered if re-financing with today's rates would be of any benefit and would appreciate any opinions on this.
thank you
thank you
5
Posted on 4/18/13 at 9:47 am to wfallstiger
so you have 5 years left on your loan? It's possible to get a significantly lower rate, and pay the same amt your used to paying on your current loan and pay it off a little earlier. We just did that with our 15 yr loan. You'd just have to resist the temptation to only pay what's required, which would be a lot less than you're used to paying.
Posted on 4/18/13 at 9:49 am to meeple
yes, we have 5 years remaining and thank you
Posted on 4/18/13 at 10:21 am to wfallstiger
quote:
if re-financing with today's rates would be of any benefit and would appreciate any opinions on this.
I just closed yesterday at 3.15% so yes I think you could benefit from it. I think your breakeven point of savings on interest vs closing cost would only be a year or two. I would pull the trigger!
Posted on 4/18/13 at 10:47 am to wfallstiger
Absolutely worth it. Keep in mind that if you qualify for the best 30 year rates, then after the tax deduction for interest you are paying around the long-term rate of inflation. This means your real interest cost is ... zero. Or close to it. Guaranteed for 30 years.
Interestingly, this means a 15 year is not as good a deal b/c you are paying a higher amount to retire a debt that has negative real return.
Interestingly, this means a 15 year is not as good a deal b/c you are paying a higher amount to retire a debt that has negative real return.
Posted on 4/18/13 at 10:51 am to foshizzle
IF you want to pay off in 5 yrs and refi on existing amortization, the opportunity to break even on the costs is tight because of the large amount of principal paid each month.
If you want to refi on a longr amortization and have the flexibility to pay more......then i concur with what foshizzle said.
If you want to refi on a longr amortization and have the flexibility to pay more......then i concur with what foshizzle said.
Posted on 4/18/13 at 1:24 pm to foshizzle
quote:
then after the tax deduction for interest
with less than 5 years left the total amount he pays in interest might be less than the standard dect.
Posted on 4/18/13 at 11:01 pm to TigerintheNO
quote:
with less than 5 years left the total amount he pays in interest might be less than the standard dect.
That is true on the existing loan, but not on the refi should he choose to go that route. That's why I think having only 5 years left is not as good as having 30 years left.
You have someone else's money for 30 years instead of 5. At an effective real interest rate of zero the entire time instead of five years at 5% or so. This is a very easy decision. The only complication is that it does tie you to the property for 30 years, but renting can be lucrative.
Posted on 4/19/13 at 7:10 am to wfallstiger
I am a mortgage lender. Probably not worth it. You are paying mostly principle.
Posted on 4/19/13 at 7:35 am to wfallstiger
Posted on 4/19/13 at 9:27 am to novabill
quote:
I am a mortgage lender. Probably not worth it. You are paying mostly principle.
I could be wrong about you, but most mortgage lenders know that it is "principal", not "principle".
Repaying principal is not necessarily a good thing when real borrowing costs are basically zero.
Posted on 4/19/13 at 12:28 pm to wfallstiger
There are many answers to your question depending on your objective. If you want to save interest and pay off the house, run the numbers based on a 5 year loan and see how much you save in interest compared to your current remaining payment schedule. Don't forget to include closing cost. I doubt that it is a huge savings, unless you are talking about a huge mortgage.
Many people will say to refinance because you are getting cheap money, and you can earn more than you are paying in interest. Just keep in mind that this is not always what happens in real life.
Many people will say to refinance because you are getting cheap money, and you can earn more than you are paying in interest. Just keep in mind that this is not always what happens in real life.
Posted on 4/19/13 at 12:43 pm to foshizzle
quote:This made me
I could be wrong about you, but most mortgage lenders know that it is "principal", not "principle".
Posted on 4/19/13 at 1:26 pm to LSUAfro
I'm quite serious. There are plenty of people who don't know the difference between principle and principal, but a real mortgage lender sure as hell should. And so I question whether he really is one.
And I hope he doesn't come back on here claiming it's the phone's fault, mortgage lenders are supposed to be good at proofreading mortgage contracts too.
And I hope he doesn't come back on here claiming it's the phone's fault, mortgage lenders are supposed to be good at proofreading mortgage contracts too.
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