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personal opinion, but with rates being this low I'd think the less you can put down out of pocket the better. If you have any other type of debt (student loans, car, credit card, etc.) you'd be better off putting the larger down payment toward that. If you have no other debt you'd still likely be better investing that extra $. Again, totally my opinion and likely the direction I'd go.
Have you considered looking at a 30 year and just making additional payments? The only reason I mention this is because the interest rates will likely be very close to a 15 and this will pretty much cut your mortgage payment in half. You can always make additional payments to pay it off faster, but if you ever find yourself out of work, or wanting to save for a large purchase or a vacation or something you'll have the option of making the smaller payment... Just something to consider. Especially with how much we've been printing money, there has to be some inflation coming that'll help chew up debt.
In my opinion, you have all the numbers you need right there. You don't need a calculator.
You have to answer the question -- Do you want to pay thousands of dollars in closing costs just for the privilege of re-paying that interest all over again ?
That Original Mortgage was a bad deal, and should have been re-financed back around 2013. You've been mailing them checks for 10 years and only knocked $60K off the principal.
On the current loan....how much are you chipping away at principal each month ?? Are you able to take full advantage of the Interest Tax Deduction ?? You might be better off starting up a separate Fund, to be used as Emergency Money....and then pay this deal off completely when it no longer provides a Tax dodge.
Speaking strictly for myself, the closing costs you've been quoted are too high. Have you truly shopped this around ??
It's hard to say if it's worth it or which loan structure is best without knowing how long you plan to stay in the home. If you plan to sell in a year or two then it's probably not. Over the term of the loan it's for sure worth it because you're going to save 10's of thousands in interest.
The payback period would be easier to determine if you shared your total monthly payment. What is your payment now and what will your new payment be under each scenario?
So the one with the buy down is going to result in lower payback total, however, they are betting you will sell the house sooner so than the 15 year holding period. So if you plan to hold on for a long(er) time, it makes more sense to go with that one. Still working on payback period.
Loan A- total cost is 299,793.75
Loan B- total cost is 300,670.05
Your original loan is harder to calculate since you're partway through it, but if you put in 20 years with the current balance at 4.5%, the total cost is $359,850.97. So either loan will save you a good chunk of money in interest.
If it were me, I would do loan B in order to have a lower loan balance since spending that chunk of money to lower the interest saves you less than 1000 over 15 years. If you're wanting to lower the total cost of the loan, it would make more sense to pay a little extra each month and pay off the loan sooner, rather than using that to lower the interest rate. For example if you pay it off even one year sooner, you save $4k in interest payments which is more than you would have saved with loan A.
We're actually looking at a very similar refi situation and it seems like under about 3% there's a cut-off point where you really get diminishing returns on paying points to lower the interest rate. Disclaimer: I am not a financial expert, I've just been running the numbers a lot on our own situation recently
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