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Started By
Message
I'm struggling to figure out if refinancing makes sense for my situation.
Posted on 9/9/20 at 3:11 pm
Posted on 9/9/20 at 3:11 pm
I have a home mortgage and below are the original purchase attributes.
Purchased: 2012
Loan amount: $275,000
Term: 30 yr fixed
Rate: 3.5%
I've been paying about $140 extra towards the principle since the beginning of the loan.
I'm looking for to refinance to a 15 yr mortgage. Remaining balance on loan is $218,000. House is worth about $410,000. Credit is above 800 with all credit bureaus.
My dilemma is that I don't know if the payback makes sense if I have to pay closings cost and/or points to drop the rate low enough to make it beneficial. I'm able to comfortably add another $200 per month on top of the extra amount I already send and keep my current loan to help with paying it off faster.
There are some smart people in the Money Talk forum and I'm sure there's someone out there than can help me figure this out.
Thanks in advance!!
Purchased: 2012
Loan amount: $275,000
Term: 30 yr fixed
Rate: 3.5%
I've been paying about $140 extra towards the principle since the beginning of the loan.
I'm looking for to refinance to a 15 yr mortgage. Remaining balance on loan is $218,000. House is worth about $410,000. Credit is above 800 with all credit bureaus.
My dilemma is that I don't know if the payback makes sense if I have to pay closings cost and/or points to drop the rate low enough to make it beneficial. I'm able to comfortably add another $200 per month on top of the extra amount I already send and keep my current loan to help with paying it off faster.
There are some smart people in the Money Talk forum and I'm sure there's someone out there than can help me figure this out.
Thanks in advance!!
9
Posted on 9/9/20 at 3:16 pm to Hammond Tiger Fan
Do you plan to live in the house until its paid off? If so do it if you can afford the new payment.
Posted on 9/9/20 at 3:25 pm to Jobo
quote:
Do you plan to live in the house until its paid off?
I don't plan on moving unless my job situation changes. I can't control that.
Posted on 9/9/20 at 3:28 pm to Hammond Tiger Fan
Have you looked at rates on a 15? How much lower are they?
If it were me, I’d keep the 30 year note just in case something happens and you can’t afford the extra monthly principle. You can still pay it off early
If it were me, I’d keep the 30 year note just in case something happens and you can’t afford the extra monthly principle. You can still pay it off early
Posted on 9/9/20 at 3:34 pm to Hammond Tiger Fan
I’d say if you think you will be in that house for atleast 5 more years and you could get a rate lower than 2.5% it would be worth it.
Posted on 9/9/20 at 3:39 pm to Hammond Tiger Fan
I just closed on a 2.25 30 year buying a half point. Very much worth it.
Posted on 9/9/20 at 3:59 pm to C
Who did you go through to get that rate?
Posted on 9/9/20 at 6:24 pm to Hammond Tiger Fan
Don’t forget to account for the additional principal applying to your current mortgage as well. Meaning if you can afford +$200/mo to your mortgage, make sure the analysis includes that for the current payment. With that payment, your 22 years left result in less.
I’ll run it through my spreadsheet when I get back to computer.
Have you looked at rates? Costs? Points?
I’ll run it through my spreadsheet when I get back to computer.
Have you looked at rates? Costs? Points?
Posted on 9/9/20 at 6:34 pm to jsquardjj
Nasb. Happy to pass along a contact if you like
Posted on 9/9/20 at 7:43 pm to Hammond Tiger Fan
At a cost of $3k for the refi (at 2.5%), you save only about a year and roughly $23k over the life of the loan ($150k difference does not account for the amount already paid of ~$127k). This just matches the payment for the 15 year loan, which is only about +$240 vs your suggested max of +$340.
Edited to clarify the “Total Paid” difference does not account for loan payments already made.
Edited to clarify the “Total Paid” difference does not account for loan payments already made.
This post was edited on 9/9/20 at 9:14 pm
Posted on 9/9/20 at 9:29 pm to Hammond Tiger Fan
quote:
I'm struggling to figure out if refinancing makes sense for my situation.
Were the answers to your same question 3 weeks ago not satisfactory? It's not worth refinancing if you can just afford to pay the extra monthly amount instead. Save the money you'd pay on closing costs.
I researched doing the same. Currently 4 years into a 3.625% on 30 year mortgage. Been paying extra almost every month.
Decided to just to continue paying an extra $400/month to pay off our existing mortgage in 15 years instead of paying the closing costs for a new 15 year rate.
Posted on 9/9/20 at 9:58 pm to C
quote:
I just closed on a 2.25 30 year buying a half point. Very much worth it.
I don't see how getting another 30 year mortgage will benefit in my situation. Monthly cash flow isn't the issue.
Posted on 9/9/20 at 10:04 pm to LSUtigerME
quote:
LSUtigerME
Thanks man for evaluating my numbers. That's what I needed to see. I was struggling to do the comparison like you laid it out for me.
Posted on 9/9/20 at 10:06 pm to LSU
quote:
Were the answers to your same question 3 weeks ago not satisfactory? It's not worth refinancing if you can just afford to pay the extra monthly amount instead. Save the money you'd pay on closing costs.
I researched doing the same. Currently 4 years into a 3.625% on 30 year mortgage. Been paying extra almost every month.
Decided to just to continue paying an extra $400/month to pay off our existing mortgage in 15 years instead of paying the closing costs for a new 15 year rate
Yeah, I had a feeling what you suggested would apply to my situation, but I like to see the numbers before making a final decision and was struggling a little trying to do the comparison. LSUtigerME helped me out a lot by laying it out in spreadsheet form for me.
This post was edited on 9/9/20 at 10:07 pm
Posted on 9/9/20 at 10:16 pm to Hammond Tiger Fan
quote:
Monthly cash flow isn't the issue.
I’m just showing you can easily cut out 30% of the interest you’re paying. You’re never going to get your hands on cheaper capital. I’d max that sucker out to fully invest in whatever you use to secure retirement.
Posted on 9/9/20 at 10:27 pm to Hammond Tiger Fan
Why would you not refinance? 15 year rate is right around 2% with your credit score and LTV.
Your existing mortgage:
If Pay Extra $140.00 per month
Monthly Pay $1,374.87
Total Payments $428,922.44
Total Interest $153,922.44
Remaining Payments $310,374.65
Remaining Interest $83,242.26
Payoff in 18 years and 10 months
New 15 Year Mortgage (2.25%)
Monthly Pay $1,428.08
Total Payments $257,055.26
Total Interest $39,055.26
New 15 year mortgage with $3000 in closing costs rolled in because hold onto your cash since you can make more than 2.25%/year on that cash in an S&P index fund for the next 15 years:
Monthly Pay $1,447.74
Total Payments $260,592.72
Total Interest $39,592.72
So, for less than $75 extra per month, and probably next to nothing out of pocket, you save nearly $44,000 in interest and almost 4 years.
Calculator
2% Interest rate in Baton Rouge ($765 in points)
LINK
Your existing mortgage:
If Pay Extra $140.00 per month
Monthly Pay $1,374.87
Total Payments $428,922.44
Total Interest $153,922.44
Remaining Payments $310,374.65
Remaining Interest $83,242.26
Payoff in 18 years and 10 months
New 15 Year Mortgage (2.25%)
Monthly Pay $1,428.08
Total Payments $257,055.26
Total Interest $39,055.26
New 15 year mortgage with $3000 in closing costs rolled in because hold onto your cash since you can make more than 2.25%/year on that cash in an S&P index fund for the next 15 years:
Monthly Pay $1,447.74
Total Payments $260,592.72
Total Interest $39,592.72
So, for less than $75 extra per month, and probably next to nothing out of pocket, you save nearly $44,000 in interest and almost 4 years.
Calculator
2% Interest rate in Baton Rouge ($765 in points)
LINK
Posted on 9/9/20 at 10:33 pm to LSU
quote:
Decided to just to continue paying an extra $400/month to pay off our existing mortgage in 15 years instead of paying the closing costs for a new 15 year rate.
Unless you're moving soon or won't qualify for a good rate, this is a poor decision. To avoid "paying" a few thousand in closing costs, you're going to end up paying so much more in interest over the life of the loan. I put "paying" in quotes, because you just roll the closing costs into the loan. You'll still come out way ahead.
Posted on 9/9/20 at 10:59 pm to whitefoot
quote:
Why would you not refinance? 15 year rate is right around 2%
A couple of weeks ago when calling around for to see what the best rates were for my situation, the feedback I was getting was no where near the lower 2% range. I think the lowest was 2.4% with paying about $1,300 in points. When you added in closing costs on top of that I didn't see how it was worth it.
Posted on 9/9/20 at 11:12 pm to Hammond Tiger Fan
Not sure who you called but the rates are out there. Check the link I posted. Go to bankrate.com. Go to nerd wallet. They post rates from many lenders.
You have to watch and shop them. They change daily.
2.4% with $1300 in points sounds insane. Were you just calling local banks like Chase and Wells Fargo or something?
But regardless, plug 2.4% and $223,000 loan and refinancing is still way ahead.
Normal loan repayment without extra payments:
Monthly Pay $1,476.47
Total Payments $265,763.75
Total Interest $42,763.75
You have to watch and shop them. They change daily.
2.4% with $1300 in points sounds insane. Were you just calling local banks like Chase and Wells Fargo or something?
But regardless, plug 2.4% and $223,000 loan and refinancing is still way ahead.
Normal loan repayment without extra payments:
Monthly Pay $1,476.47
Total Payments $265,763.75
Total Interest $42,763.75
This post was edited on 9/9/20 at 11:16 pm
Posted on 9/9/20 at 11:35 pm to Hammond Tiger Fan
Get the 2% or under 15yr
Buydown if needed
Call it a day and dont think twice
Buydown if needed
Call it a day and dont think twice
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