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Started By
Message
Refinancing from 30yrs to 15yrs
Posted on 7/20/10 at 2:21 pm
Posted on 7/20/10 at 2:21 pm
Is it a good idear to switch from 30yr mortgage at 5% to a 15yr mortgage at 3.5%?
I plan on paying off the 30yr mortgage in about 15yrs, so is it worth refinancing.
I plan on paying off the 30yr mortgage in about 15yrs, so is it worth refinancing.
4
Posted on 7/20/10 at 2:22 pm to bestdamnsportsguy
I honestly believe if you can get 30 year money for 4.5%, then you should go out of your way not to pay it back quickly.
Posted on 7/20/10 at 2:38 pm to Tiger JJ
quote:
I honestly believe if you can get 30 year money for 4.5%, then you should go out of your way not to pay it back quickly.
You know, I understand the aversion some folks have to debt but it really seems like a no-brainer to go for the cheap 30 year money. As long as there is no pre-payment penalty, there's nothing stopping you from paying additional principal every month to pay it off early and have the extra flexibility in your monthly cash flow if needed.
This post was edited on 7/20/10 at 2:39 pm
Posted on 7/20/10 at 2:39 pm to Martavius
if you hold tight 30 year money might get to 4% this week
Posted on 7/20/10 at 2:45 pm to hawkeye007
quote:
if you hold tight 30 year money might get to 4% this week
WOW. Nice....
Posted on 7/20/10 at 2:58 pm to Martavius
quote:
You know, I understand the aversion some folks have to debt but it really seems like a no-brainer to go for the cheap 30 year money. As long as there is no pre-payment penalty, there's nothing stopping you from paying additional principal every month to pay it off early and have the extra flexibility in your monthly cash flow if needed.
Right. Borrow the long money and retain all the optionality for yourself - refi, accelerated amortization, etc.
It's basically a margin loan in which you can never get a margin call so long as you are current on your payments. It's way stupid and way cheap, thus you should take full advantage of it.
Posted on 7/20/10 at 2:59 pm to bestdamnsportsguy
Given that the planned 15 year note has a considerably lower rate than your current 30 year note I would take the 15 year note.
Posted on 7/20/10 at 3:37 pm to bestdamnsportsguy
No one stays in a home ten years much less 30. If you go do the 30, you basically are just paying rent the first few years.
Posted on 7/20/10 at 3:38 pm to Tiger JJ
quote:
Right. Borrow the long money and retain all the optionality for yourself - refi, accelerated amortization, etc.
It's basically a margin loan in which you can never get a margin call so long as you are current on your payments. It's way stupid and way cheap, thus you should take full advantage of it.
I've thought this for a long time, but haven't pitched it much, just because the idea of intentionally staying in debt is pretty hard to get through to the average person.
Posted on 7/20/10 at 3:39 pm to Tiger JJ
quote:
I honestly believe if you can get 30 year money for 4.5%, then you should go out of your way not to pay it back quickly.
I kind of agree with this but if you can get the 15 year note at the same payment you are getting the 15 year or even a hundred higher I would do it. My thoughts for this are bc you start putting equity back into your house at a faster rate. 3.5 is cheap too. I guess I think in termss of selling btwn 5-7 yeears later you walk with more cash in your pocket. Just my thoughts
Posted on 7/22/10 at 1:42 am to carlsoda
I agree but dropping his rate 1pt on a 15yr will not make his pmt the same or $100 higher. Listen to 007. We could see 30yr rates hit the 3's here soon. Obviously there are no guarantees but there is nothing to keep it from happening soon. Unless you are completely comfortable in this economy, keep your 30yr and just pay extra. You will have closing cost to add into savings and that will take a few years to recoup.
Posted on 7/22/10 at 8:54 am to bestdamnsportsguy
As others have mentioned... I'm in the camp that thinks you should hang on to the good deal (cheap money) as long as possible. Why be in such a rush to end a good deal? It's a fixed rate and will never change. On top of that what little interest you do pay is tax deductible.
I have one friend who even rushed to pay off his 0% interest car loan. I didn't even bother trying to explain to him how stupid this was. Since the interest was pre-paid, he wasn't saving anything obviously.
I have one friend who even rushed to pay off his 0% interest car loan. I didn't even bother trying to explain to him how stupid this was. Since the interest was pre-paid, he wasn't saving anything obviously.
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