Should I refinance or pay more towards loan???
Our current rate is 5.375 on a 30 year note. we owe 280,000. Our monthly payment on at is 1679. (We have been paying 1800/month). We have an opportunity to refinance into a 15 year loan at 4.6 with 0 points. (We can afford the extra payment)What makes sense? Should we stick with our original loan and just pay the amount ($2157) we would be paying on the 15 year note to the original note?We plan on staying in the house for a very long time. by mrsbradley55 from Austin, Texas. Dec 16th 2009
Leo Harvey (LHARVEY)
#6 ranked lender in Pennsylvania - 149 contributions
This is an excellent question. I have run some calculations for you as follows: 1. to refinance 285k @ 15yr 4.6% $2194 payment2. continue existing to amortize in 15 yrs. $ 2269 paymentThe difference is $75 a month to accomplish the same task.Your costs to re-finance are about $4000 (no pts) Divide 4000 by 75 and get 54 months to achieve break even on your costs. The answer therefor is that you can save $75 monthly after 4 1/2 years of. This does not take into account the interest you could be earning on the $4000 in re-finance costs that you will have to pay immediately either in cash at closing or rolled into the loan amount. The one benefit you have in your current situation is the ability to make the lower payment if financial ability was reduced for some reason. After you re-finance into the 15 yr program you are locked into the higher monthly payment.Just some thoughts to ponder.
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