Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
My original home loan was $412k, 3.5% with $1,850.06 payment. Now my balance is $391k and the broker offered 3.125% this morning. My home is estimated at $660k now. Thank you for your advice.
330 x $1850.06 = $610,520 (Current mortgage and number of payment left is 330)
360 x $1674.95 = $602,982
Most of what you posted is irrelevant in determining whether or not refinancing is a good idea. It's how much interest you pay over the life of the loan that counts. Here's how I analyze the question. You can adopt that method or not.
Let's start with your original loan.
412,000 at 3.5% with P and I of 1850.06. You've made 30 payments. You've paid interest of 35,204 to date. If you keep this loan your total interest paid over 30 years would be 254,024.
Now let's look at your new loan.
391,000 at 3.125% with P and I of 1674.95 with a new 30 year period. Total interest paid over the life of the loan would be 211,980.
211,980 35,204
247,184 would be the combined interest for both loans.
You have 254,024 left on the old loan.
Your interest savings with the refinance would be 6,840. That's close to being a wash. But you would be reducing your P and P payments by 175.11 which is very good.
Given those calculations, refinancing looks like a good idea for you.
However, here's what happens if you keep paying 1850.06 on the new loan. Your total interest over the life of the new loan is 177,389, an additional savings of about 35,000 and the loan would be paid off in 307 payments (about 25 1/2 years).
You can use this amortization calculator to verify the figures:
Thank you Jack. I plan to pay more to make it $2100 a month total to match my retirement in about 21 years. I will go ahead with the loan.
Quote:
Originally Posted by adjusterjack
Most of what you posted is irrelevant in determining whether or not refinancing is a good idea. It's how much interest you pay over the life of the loan that counts. Here's how I analyze the question. You can adopt that method or not.
Let's start with your original loan.
412,000 at 3.5% with P and I of 1850.06. You've made 30 payments. You've paid interest of 35,204 to date. If you keep this loan your total interest paid over 30 years would be 254,024.
Now let's look at your new loan.
391,000 at 3.125% with P and I of 1674.95 with a new 30 year period. Total interest paid over the life of the loan would be 211,980.
211,980 35,204
247,184 would be the combined interest for both loans.
You have 254,024 left on the old loan.
Your interest savings with the refinance would be 6,840. That's close to being a wash. But you would be reducing your P and P payments by 175.11 which is very good.
Given those calculations, refinancing looks like a good idea for you.
However, here's what happens if you keep paying 1850.06 on the new loan. Your total interest over the life of the new loan is 177,389, an additional savings of about 35,000 and the loan would be paid off in 307 payments (about 25 1/2 years).
You can use this amortization calculator to verify the figures:
One thing I look at is the refinance cost. For example I just refinanced and it costs me $4K in refinance cost. I save $550 per month so it will take me a little over 7 month to break even. In your case, I would take the loan that pays you back money (no refinance cost). Any additional savings on monthly payment is a good thing.
The total interest you paid over the life of the loan is interesting but IMO is an intellectual exercise. Ask yourself honestly how long you will stay in this place? In reality, most people stay 5 - 10 years only.
If you really intend to stay there for the life of the loan, it might make sense if the loan costs are low. If you're going to move in a few years it would NOT pay.
My lender recommended that refinancing makes good sense if you're going to save a point... not sure it's worth doing necessarily for less than half a point. Your current interest rate isn't that bad.
I have seen interest rates as low as 2.6 recently. If you could get that.... it would be worth doing.
The total interest you paid over the life of the loan is interesting but IMO is an intellectual exercise. Ask yourself honestly how long you will stay in this place? In reality, most people stay 5 - 10 years only.
True. But it's only one factor in the decision process. And, since most of the payment goes to interest in the early years, an analysis of the first 5 - 10 years would also be helpful.
If so, I'm not seeing it out there. I'm buying a home and was just offered a 30 year at 3.0% with a $1,400 credit, which is pretty close to what OP is being offered. I searched, but do not see anything lower...
Interest paid over the life of the loan? - Yes, if staying the full 30 years in one home. But who does that in California? It is very rare to stay unless you're in your late 50's and above.
There's some loans offered that re-amortize if you pay more towards principal than your scheduled monthly payment.
- only 4 months to recoup the costs is great.
The $2,100 savings per year ($175/mo) is not much but it can go toward any of these things.
- grocery costs have gone
- inflation is anticipated in the coming years due to Fed Reserve's QE
- possible job loss; every little bit helps
- paying kids utilities or helping with their car note
- misc. kids expenses
- insurance deductible doesn't cover vandalism; example $500-$1,000 damage to car, dentist, medical deductibles or kids healthcare
- Note: insurance policies are bound to increase thanks to the organized protesting and looting allowed during a pandemic.
- 2 or 3 dinners out more with the wife or husband
- entertainment tickets, whenever they re-start
- join a gym, get a personal trainer 1x a week; hot yoga?? ok. jk..lol
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
