plenzmd1 Posted June 25, 2010 Share Posted June 25, 2010 So, just applied for a refi. I am currently at 5.625% on a 30 yr fixed and have 268 payments left. Will get 4.5% with a point paid on a new 30 yr fixed, which will bring my monthly nut down by almost $350. I make the point up in 44 payments, and I intend to be in the house at least ten years , so buying down the rate sounds good. Heres my question. I know I am saving $350 a month, but I am also adding 7 years of payments. Is there some kind of equation that tells me whether this is a good move or not? Can i rationalize and say and the end of 22 yrs just pay off the principal and I will be better off? Or is that stinkin thinking cause by then all thats really left is principal? Also, I cannot see being in this house more than another 15 yrs, as by that time both kids will be out of the house, and I will absolutely downsize and move back to downtown DC. I just don't know why I can't figure this out Link to comment Share on other sites More sharing options...
Movinon Posted June 25, 2010 Share Posted June 25, 2010 So, just applied for a refi. I am currently at 5.625% on a 30 yr fixed and have 268 payments left. Will get 4.5% with a point paid on a new 30 yr fixed, which will bring my monthly nut down by almost $350. I make the point up in 44 payments, and I intend to be in the house at least ten years , so buying down the rate sounds good. Heres my question. I know I am saving $350 a month, but I am also adding 7 years of payments. Is there some kind of equation that tells me whether this is a good move or not? Can i rationalize and say and the end of 22 yrs just pay off the principal and I will be better off? Or is that stinkin thinking cause by then all thats really left is principal? Also, I cannot see being in this house more than another 15 yrs, as by that time both kids will be out of the house, and I will absolutely downsize and move back to downtown DC. I just don't know why I can't figure this out No Math wizard by any stretch but what if you take that extra 350 and pay it on the principal each month? I did a streamline refi w/ Wells Fargo, no appraisal, no closing cost. They dropped my rate from 5.5. to 5 and reset my loan to 30 years. For me it was a no brainer since I only had the original mortgage for 20 months. Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted June 25, 2010 Share Posted June 25, 2010 No Math wizard by any stretch but what if you take that extra 350 and pay it on the principal each month? I did a streamline refi w/ Wells Fargo, no appraisal, no closing cost. They dropped my rate from 5.5. to 5 and reset my loan to 30 years. For me it was a no brainer since I only had the original mortgage for 20 months. Where are you? Wife and I bought last year, and got 4.25%. No way I'm refi, unless it drops into the 2s. Link to comment Share on other sites More sharing options...
Movinon Posted June 25, 2010 Share Posted June 25, 2010 Where are you? Wife and I bought last year, and got 4.25%. No way I'm refi, unless it drops into the 2s. VA. Again, I paid nothing in closing. Is your 4.25 an arm? Link to comment Share on other sites More sharing options...
plenzmd1 Posted June 25, 2010 Author Share Posted June 25, 2010 No Math wizard by any stretch but what if you take that extra 350 and pay it on the principal each month? I did a streamline refi w/ Wells Fargo, no appraisal, no closing cost. They dropped my rate from 5.5. to 5 and reset my loan to 30 years. For me it was a no brainer since I only had the original mortgage for 20 months. That I would have no idea on how to figure out, if we then get it paid off quicker, but great point. Also, this loan has zero costs except the point, otherwise the rate is 5%. Place is called Cap Center in Richmond, did a refi with them several years ago, so they is legit with the no costs thing!! Link to comment Share on other sites More sharing options...
plenzmd1 Posted June 25, 2010 Author Share Posted June 25, 2010 VA. Again, I paid nothing in closing. Is your 4.25 an arm? Might be 15 yr fixed as they are at 4 %with no costs at Cap Center. I looked at those, while I save 7 years of payments, cost go up by about $250/month. btw, these types of articles got me into looking today, says lowest in 50 years http://blogs.wsj.com/developments/2010/06/...is-demand-weak/ Link to comment Share on other sites More sharing options...
Movinon Posted June 25, 2010 Share Posted June 25, 2010 Might be 15 yr fixed as they are at 4 %with no costs at Cap Center. I looked at those, while I save 7 years of payments, cost go up by about $250/month. btw, these types of articles got me into looking today, says lowest in 50 years http://blogs.wsj.com/developments/2010/06/...is-demand-weak/ Without question, if ever a time to refi it is now. Don't think these rates will stay this low much longer. Link to comment Share on other sites More sharing options...
stuckincincy Posted June 25, 2010 Share Posted June 25, 2010 So, just applied for a refi. I am currently at 5.625% on a 30 yr fixed and have 268 payments left. Will get 4.5% with a point paid on a new 30 yr fixed, which will bring my monthly nut down by almost $350. I make the point up in 44 payments, and I intend to be in the house at least ten years , so buying down the rate sounds good. Heres my question. I know I am saving $350 a month, but I am also adding 7 years of payments. Is there some kind of equation that tells me whether this is a good move or not? Can i rationalize and say and the end of 22 yrs just pay off the principal and I will be better off? Or is that stinkin thinking cause by then all thats really left is principal? Also, I cannot see being in this house more than another 15 yrs, as by that time both kids will be out of the house, and I will absolutely downsize and move back to downtown DC. I just don't know why I can't figure this out How are you having to add seven more years of payments, and paying points with a re-fi to a lower interest rate? I understand being cash-strapped, but don't dig a hole that has to be paid off dearly in the future. Find some competent independent advice, even if you have to peel off a cash money c-note or two for it. A note: If you are planning to prepay principle from time to time, make sure that that pr-payment gets credited as a principle reduction when they cash the check, and get it in writing (be sure that they don't hang on to them - that's a favorite trick of doctors, so they can juggle reportable income each quarter). *Some* lenders cash the check, but won't credit the pre-payments until the end of the year. Read your statements like a hawk, re-read them, and compare to previous to be sure that the principle owed has in fact been reduced. Read what you sign. Link to comment Share on other sites More sharing options...
DC Tom Posted June 25, 2010 Share Posted June 25, 2010 So, just applied for a refi. I am currently at 5.625% on a 30 yr fixed and have 268 payments left. Will get 4.5% with a point paid on a new 30 yr fixed, which will bring my monthly nut down by almost $350. I make the point up in 44 payments, and I intend to be in the house at least ten years , so buying down the rate sounds good. Heres my question. I know I am saving $350 a month, but I am also adding 7 years of payments. Is there some kind of equation that tells me whether this is a good move or not? Can i rationalize and say and the end of 22 yrs just pay off the principal and I will be better off? Or is that stinkin thinking cause by then all thats really left is principal? Also, I cannot see being in this house more than another 15 yrs, as by that time both kids will be out of the house, and I will absolutely downsize and move back to downtown DC. I just don't know why I can't figure this out I could answer this...but I'd need quite a bit more info than you've given here, and most of that I wouldn't want you posting here. PM me if you want. Link to comment Share on other sites More sharing options...
Richmond_Bills Posted June 25, 2010 Share Posted June 25, 2010 So, just applied for a refi. I am currently at 5.625% on a 30 yr fixed and have 268 payments left. Will get 4.5% with a point paid on a new 30 yr fixed, which will bring my monthly nut down by almost $350. I make the point up in 44 payments, and I intend to be in the house at least ten years , so buying down the rate sounds good. Heres my question. I know I am saving $350 a month, but I am also adding 7 years of payments. Is there some kind of equation that tells me whether this is a good move or not? Can i rationalize and say and the end of 22 yrs just pay off the principal and I will be better off? Or is that stinkin thinking cause by then all thats really left is principal? Also, I cannot see being in this house more than another 15 yrs, as by that time both kids will be out of the house, and I will absolutely downsize and move back to downtown DC. I just don't know why I can't figure this out Paul - I'm also re-financing with Capcenter (will be my 4th time or so) and close next Friday. Here is a simple way to think about it. Assuming round numbers for purposes of this discussion: old loan: $1000/mo. x 268 months remaining = 268,000 new loan: $650/mo. x 360 months of new loan = 234,000 To me this is a no brainer... My situation was different. I was making good money, refinanced to a 20 year note in 2008. Late in the year, I lost my job and then in early 2009 refinanced back to a 30 to decrease my payment amount. Now, I'm refinancing again, reducing my rate by over half a percent and cutting 9 years off my mortgage. thereby increasing the principle I'm paying each month. I'm taking a little cash out to boot, but my payment is only going up like $200 per month. Good luck - let me know when you want to go out for a beer...Jim Link to comment Share on other sites More sharing options...
/dev/null Posted June 25, 2010 Share Posted June 25, 2010 http://www.vertex42.com/Calculators/home-m...calculator.html Link to comment Share on other sites More sharing options...
DrDawkinstein Posted June 25, 2010 Share Posted June 25, 2010 I could answer this...but I'd need quite a bit more info than you've given here, and most of that I wouldn't want you posting here. PM me if you want. first pet's name, favorite teacher, etc? Link to comment Share on other sites More sharing options...
Just Jack Posted June 25, 2010 Share Posted June 25, 2010 first pet's name, favorite teacher, etc? mothers maiden name, street he grew up on, etc Link to comment Share on other sites More sharing options...
Pine Barrens Mafia Posted June 25, 2010 Share Posted June 25, 2010 VA. Again, I paid nothing in closing. Is your 4.25 an arm? 30 year fixed FHA. w00t w00t Only bummer, have PMI. So I may *have* to refi to get out from under it as we bought at about 15-20k below market value. I took a relo company to the cleaners, house was held by the relo for a year. Bought for 179, they had it listed for 205. The real estate crash made it possible for me to buy a house again. Yay greed! Link to comment Share on other sites More sharing options...
Scraps Posted June 28, 2010 Share Posted June 28, 2010 Might be 15 yr fixed as they are at 4 %with no costs at Cap Center. I looked at those, while I save 7 years of payments, cost go up by about $250/month. btw, these types of articles got me into looking today, says lowest in 50 years http://blogs.wsj.com/developments/2010/06/...is-demand-weak/ While your costs go up by $250/month, that money is going back to you in the form of principal. That is money you are paying to yourself. If you can swing the 15 year, that is a far better way to go in my opinion. Link to comment Share on other sites More sharing options...
yall Posted June 28, 2010 Share Posted June 28, 2010 Or even a 20 year. In fact, that is what I'm doing. Keeping my monthly payments within 20 bucks of what they are now, but shaving 7 years off the mortgage. Link to comment Share on other sites More sharing options...
Nanker Posted June 28, 2010 Share Posted June 28, 2010 You should also look into paying the mortgage bi-weekly. You end up paying 13 months of payments in a year - but it'll shave about 3 years off a 15 year mortgage - which is what I'm doing. Linky thingy Here's a simple one. Just make sure your mortgage lender will accept payments bi-weekly and that you can handle the payments. Link to comment Share on other sites More sharing options...
yall Posted June 28, 2010 Share Posted June 28, 2010 You should also look into paying the mortgage bi-weekly. You end up paying 13 months of payments in a year - but it'll shave about 3 years off a 15 year mortgage - which is what I'm doing. Linky thingy Here's a simple one. Just make sure your mortgage lender will accept payments bi-weekly and that you can handle the payments. Why not just pay extra principle when you can? Bi-weekly's always seemed a bit silly to me, because you get locked in. You can essentially get the same results by allocating a touch more on your monthly, without locking into a new payment plan. Link to comment Share on other sites More sharing options...
Nanker Posted June 28, 2010 Share Posted June 28, 2010 Why not just pay extra principle when you can? Bi-weekly's always seemed a bit silly to me, because you get locked in. You can essentially get the same results by allocating a touch more on your monthly, without locking into a new payment plan. Discipline. It's a forced march for a much shorter time. Whatever repayment plan you sign on to - you're locked in to the constraints of the deal. You can still toss more at the principal whenever you can or would like with a bi-weekly. For me, it's worth it. I'm done on my 15 year note after 12 1/2 years. And, did I mention the interest saved? $13,260 on a 15 yr $250k loan @ 5.25% Link to comment Share on other sites More sharing options...
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