Going to refi, which term loan? | TigerDroppings.com

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TMFS
Member since Sep 2004
206 posts

Going to refi, which term loan?



We are close to refinancing our home loan, and not sure which way we should go. Looking at 240k left on our current loan, paying a substantially higher than current market interest rate. We have 23-24 years left on the original loan.

With the refi at 15 years we would be getting a 3.85% rate and paying almost the same exact amount and our current monthly note. Which is not an issue, but saving on the monthly payment wouldn't be terrible either. At 30 years and 4.85%, our monthly payment would drop by roughly 600 dollars. We were quoted 20 and 25 year rates, but they seemed less attractive options.

Now the issue that is complicating things in my mind are, this is not the house that we plan on living in 15-20 years down the road. Our intentions would be to build at some point, as well as my career isn't the most stable out there so issues could arise at some point to either move, downsize, or upsize .

Doing some work with online calculators I get the interest paid on both loans to be:

15 years $ 138,600
30 years $ 349,200

I guess the question is does the monthly savings outweigh the saving money on interest and higher equity in the house if you on average will live in the house for 2-10 years?









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XanderCrews
LSU Fan
Member since Mar 2009
297 posts

re: Going to refi, which term loan?


You need to decide how long you will stay in the house. I know you said probably not but your int paid numbers really dont mean anything if you leave in a year.

My advice is if you plan to move in 2-7 years do the 30. If you think you will be there longer do the 15.

You can always pay what you would have been paying on the 15 to the 30 and get the principle down faster.







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TMFS
Member since Sep 2004
206 posts

re: Going to refi, which term loan?


quote:

You can always pay what you would have been paying on the 15 to the 30 and get the principle down faster.


He definitely said that there was no pre payment penalty. This may be a dumb question, but say you made 2 payments a month, does the extra payment go straight to principle?






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XanderCrews
LSU Fan
Member since Mar 2009
297 posts

re: Going to refi, which term loan?


It depends. You need to clear it up with whoever your loan will probably get sold to. I have wells fargo and pay online. When I do they have a specific entry for me to add extra to my principle.

ie. You just need to make sure however you send in the payment make sure to earmark it or let the institution know its for extra principle.






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TMFS
Member since Sep 2004
206 posts

re: Going to refi, which term loan?


great, thanks





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