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Old 09-12-2010, 10:21 PM
 
Location: West Orange, NJ
12,545 posts, read 19,373,209 times
Reputation: 3711

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So I purchased a home and closed on it on March 17, 2010.

Purchase price: $445,000
Down Payment: 10% ($44,500)
Loan amount: $400,500
Interest Rate: 4.875% (1/4 point paid to get this rate)

Current Balance: $397,211.53

I make my payment weekly instead of monthly to help pay it down at a slightly faster rate (i forget what this saves me over the life of the loan, but it added up to a nice dollar figure).

Principle, Interest: $2,119.48

I'm being offered a few options by a mortgage broker that I was referred to (shopped him when I got my loan, but didn't end up going with his deal at the time because Bank of America beat the rate and had that 1/4 point buydown rate as well):

20 Years, 4.25% - they pay closing costs, i'm responsible for escrows (which I'd get back from my current mortgage holder within 14 days according to him). - $2,476 payment
15 years, 3.75%, same deal as above. - $2,898 payment (probably too steep for me).


my question is, is it worth refinancing down to 4.25%, 20 years, increasing my payment by $360? or, am i almost better served just making extra payments when I can, and using that $360 for other savings/investments?

i'm pretty good with money, we save regularly, both contribute to 401k, etc. i'm just looking for opinions on whether it's worth it or not. thanks!
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Old 09-13-2010, 07:01 PM
 
Location: West Orange, NJ
12,545 posts, read 19,373,209 times
Reputation: 3711
bueller?
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Old 09-14-2010, 08:44 AM
 
512 posts, read 1,286,956 times
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do the 15 if you can afford it.
also, how many points (if any) do these two options have?
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Old 09-14-2010, 10:07 AM
 
Location: Plano, Texas
1,675 posts, read 6,627,250 times
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If i read your post correctly, you are offered a 4.25% 20 year term and you have to pay nothing. Is it worth it to drop from 4.875% to 4.25% for free?

You might want to ask what rate you would get for a new 25 year or 30 year mortgage. If you can get a lower rate without paying costs, you should do it.

I am not big on advicing to pay your mortgage off faster. Where else can you borrow money for under 5% for 30 years and it is tax deductible? I would say your best bet would be to refinance to a new 30 year mortgage and take the extra money and apply toward your investments.

"There is a good article you can read about not paying your home off fast. Google :"tale of two brothers mortgage". It compares two hypothical brothers, each earning the same amount but one choosing to pay the home off faster and the other choosing to ride the mortgage out. Interesting article.
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Old 09-14-2010, 10:24 AM
 
512 posts, read 1,286,956 times
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Quote:
Originally Posted by VictorBurek View Post
If i read your post correctly, you are offered a 4.25% 20 year term and you have to pay nothing. Is it worth it to drop from 4.875% to 4.25% for free?

You might want to ask what rate you would get for a new 25 year or 30 year mortgage. If you can get a lower rate without paying costs, you should do it.

I am not big on advicing to pay your mortgage off faster. Where else can you borrow money for under 5% for 30 years and it is tax deductible? I would say your best bet would be to refinance to a new 30 year mortgage and take the extra money and apply toward your investments.

"There is a good article you can read about not paying your home off fast. Google :"tale of two brothers mortgage". It compares two hypothical brothers, each earning the same amount but one choosing to pay the home off faster and the other choosing to ride the mortgage out. Interesting article.

I just read that. That's such a silly article. very silly assumptions too.
here's the link for those who'd like to judge it for themselves:
TheWealthWalk.com - The tale of two brothers
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Old 09-14-2010, 10:52 AM
 
Location: Plano, Texas
1,675 posts, read 6,627,250 times
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What did you find silly about it?
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Old 09-14-2010, 10:53 AM
 
Location: West Orange, NJ
12,545 posts, read 19,373,209 times
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thanks! no points (so higher payment is only downside to going down to 20 term). i'll ask about 25 or 30 yr terms.
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Old 09-14-2010, 11:06 AM
 
Location: West Orange, NJ
12,545 posts, read 19,373,209 times
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he said he could do 25 yrs at 4.25%. finding out of cc's are included
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Old 09-14-2010, 11:09 AM
 
Location: Plano, Texas
1,675 posts, read 6,627,250 times
Reputation: 693
figured there would be closing costs. Find out the total costs and figure out a breakeven point. As long as you are keeping this home for many years, probably still worthwhile refinancing and lowering your interest rate over a 1/2 point.
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Old 09-14-2010, 11:57 AM
 
Location: West Orange, NJ
12,545 posts, read 19,373,209 times
Reputation: 3711
he said they'd pick up 2/3 of the cc's. i'd be on the hook for about $1,000 he says. payment goes up $15/month due to 25 yr vs 30 yr. might be worth it. gonna decide this week. .5 point is probably worth it since we'll be here at least 7 years.
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