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Old 04-16-2014, 06:40 PM
 
3,890 posts, read 5,327,376 times
Reputation: 2622

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Hi,
i have a 10 year mortgage that was refinanced exactly 1.5 years ago. We currently have 6 years left on the mortgage but we're paying very aggresivly and are on track to be done in 1.5 years.

The current loan amount is 143k. The rate is 3.25%. Monthly payment is 3100 but we pay 9200 a month.

I got an offer a couple of days ago for a refi option.....called them up yesterday and here's the deal: 3/1 ARM, rate 2.24%, $300 total closing costs.

I haven't done the detailed calculations...but at 1% less than my current rate, i guesstimated that we'd save about 1200-1500 in interest in the 1.5 years until we pay off the loan (same schedule as we're on now). take into account the 300 bucks closing, and i'd come out ahead by about a thousand give or take.

what are your thoughts?

Do it? or not?
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Old 04-16-2014, 06:57 PM
 
Location: N/A
849 posts, read 1,675,587 times
Reputation: 930
Quote:
Originally Posted by Thinking-man View Post
Hi,
i have a 10 year mortgage that was refinanced exactly 1.5 years ago. We currently have 6 years left on the mortgage but we're paying very aggresivly and are on track to be done in 1.5 years.

The current loan amount is 143k. The rate is 3.25%. Monthly payment is 3100 but we pay 9200 a month.

I got an offer a couple of days ago for a refi option.....called them up yesterday and here's the deal: 3/1 ARM, rate 2.24%, $300 total closing costs.

I haven't done the detailed calculations...but at 1% less than my current rate, i guesstimated that we'd save about 1200-1500 in interest in the 1.5 years until we pay off the loan (same schedule as we're on now). take into account the 300 bucks closing, and i'd come out ahead by about a thousand give or take.

what are your thoughts?

Do it? or not?
NO. you are self amortizing...quit messing with it. No way they are closing that with a traditional mortgage for $300 without rolling additional principal into your loan.
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Old 04-17-2014, 10:46 AM
 
Location: SoCal desert
8,092 posts, read 13,895,775 times
Reputation: 14907
Quote:
Originally Posted by Thinking-man View Post
Refinancing to a 3/1 year ARM .... Should i do it?
Hi,
i have a 10 year mortgage that was refinanced exactly 1.5 years ago. We currently have 6 years left on the mortgage but we're paying very aggresivly and are on track to be done in 1.5 years.
To me, it wouldn't be worth the hassle.
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Old 04-17-2014, 11:26 AM
 
Location: MMU->ABE->ATL->ASH
9,211 posts, read 18,342,162 times
Reputation: 10166
+1 Not worth Hassle..

There are going to be hidden fees. (FedEx Overnight fees, Notary fees, Recording fees etc)

Do you need to take a vacation day off for the closing? (How much is that worth)

Don't for get to you can claim the interest on your taxes, so the $1000 you "save" is even less.
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Old 04-17-2014, 11:45 AM
 
Location: Long Island
9,441 posts, read 20,254,455 times
Reputation: 5155
NO!
For a possible $1,000? Which may turn into nothing if unexpected fees pop up?
I commend you on your diligence in paying almost three times the required amount. Stick with what you have.
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Old 04-17-2014, 12:36 PM
 
Location: Mount Laurel
4,182 posts, read 10,078,998 times
Reputation: 3488
Quote:
Originally Posted by Thinking-man View Post
Hi,
i have a 10 year mortgage that was refinanced exactly 1.5 years ago. We currently have 6 years left on the mortgage but we're paying very aggresivly and are on track to be done in 1.5 years.

The current loan amount is 143k. The rate is 3.25%. Monthly payment is 3100 but we pay 9200 a month.

I got an offer a couple of days ago for a refi option.....called them up yesterday and here's the deal: 3/1 ARM, rate 2.24%, $300 total closing costs.

I haven't done the detailed calculations...but at 1% less than my current rate, i guesstimated that we'd save about 1200-1500 in interest in the 1.5 years until we pay off the loan (same schedule as we're on now). take into account the 300 bucks closing, and i'd come out ahead by about a thousand give or take.

what are your thoughts?

Do it? or not?
Something is not right with your math. If you have a $143K balance and paying $9200/month over the next 18 months, that's a total of about $165K in payment.

Refi to 2.24% (assuming it's amortized over 30 years) and you continue to pay $9200/month, you will be paying a lot less (A little over $2200 in interests) and it would not take you 1.5 years to pay it off either (16 months)

Last edited by sj08054; 04-17-2014 at 12:40 PM.. Reason: correction
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Old 04-17-2014, 12:46 PM
 
3,890 posts, read 5,327,376 times
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Quote:
Originally Posted by sj08054 View Post
Something is not right with your math. If you have a $143K balance and paying $9200/month over the next 18 months, that's a total of about $165K in payment.

Refi to 2.24% (assuming it's amortized over 30 years) and you continue to pay $9200/month, you will be paying a lot less (A little over $2200 in interests) and it would not take you 1.5 years to pay it off either (16 months)

Well, first off, a portion of the 9200 goes towards Taxes, Insurance, and Interest. Only about $8100 is being reduced from the principle each month...multiply by 18 and you get roughly $145,782

The refi to 2.24% is over 4 years....3/1 ARM....at the current pace, over the next 18 months, i'll be paying 3600 in interest......with the 2.24% rate, i suspect i'd be paying around 2300 or so as you estimated......
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Old 04-17-2014, 01:06 PM
 
Location: Mount Laurel
4,182 posts, read 10,078,998 times
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Quote:
Originally Posted by Thinking-man View Post
Well, first off, a portion of the 9200 goes towards Taxes, Insurance, and Interest. Only about $8100 is being reduced from the principle each month...multiply by 18 and you get roughly $145,782

The refi to 2.24% is over 4 years....3/1 ARM....at the current pace, over the next 18 months, i'll be paying 3600 in interest......with the 2.24% rate, i suspect i'd be paying around 2300 or so as you estimated......
So you are paying $1100 a month for taxes,insurance and interests? But that doesn't matter if your number is correct in that you have 18 more payments to make at the current terms to pay off your mortgage. You are paying a total of about $165K

If you took out a new loan @ 2.24% (doesn't matter if it's 3/1 or 5/1, chances are it amortized over 30 years). Not sure what you mean when you say 2.24% is over 4 years. With the new loan with principal payment of $8100/month, your total interests is about $2500.
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Old 04-17-2014, 01:08 PM
 
3,890 posts, read 5,327,376 times
Reputation: 2622
Ok, i called to confirm things with them....

here are the details:

2.24% for 3 years fixed. 4th year it'll be Prime + 0 but no more than 2 points increase in a year (so...max 4.24% the fourth year)
$300 includes everything. ALL costs. The title company will be local.


I'm trying to Justify NOT doing it....lol


Quote:
Originally Posted by sj08054 View Post
So you are paying $1100 a month for taxes,insurance and interests? But that doesn't matter if your number is correct in that you have 18 more payments to make at the current terms to pay off your mortgage. You are paying a total of about $165K

If you took out a new loan @ 2.24% (doesn't matter if it's 3/1 or 5/1, chances are it amortized over 30 years). Not sure what you mean when you say 2.24% is over 4 years. With the new loan with principal payment of $8100/month, your total interests is about $2500.

I misspoke....it's not "over 4 years". it's amortized over 10 years.
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Old 04-17-2014, 01:18 PM
 
Location: Vallejo
15,837 posts, read 17,815,481 times
Reputation: 14264
Normally I'd say absolutely not, but if it's only going to cost $300 in closing costs and no points, maybe. You'd save $900 or so if your calculations are correct. I didn't check them. That's probably worth it. On the other hand, you have flexibility now. Since my income is variable, I would not do it.
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