refinancing ???s

[cajunmommy]

We're running the numbers to see if refinancing make sense. However, I'm not sure how to include my extra payments toward principal when using the on-line mortgage calculators.

Say, for instance, my mortgage payment is $1200/mo, but I add an extra $300 toward principal every month. Do I use $1500 as my current monthly payment?

I know we'll save $$ on interest if we refinanced, but I'm curious how much better it would be at the lower interest rate vs. what I'm doing now.

Thanks!!!

 

[lisaross]

No, u would not add the extra payments in!

You have to also look at how much longer u have on your current mortgage - how much do u have left with the x-tra payments u make.

How much is left on your mortgage..

i'm sure someone will jump in if u give more details -

i was looking into refinancing but seems its not worth it for me after the closing costs - i have about 62,000 left on my current mortgage and about 6 more years - though a friend of mine got an offer for a "no closing Cost" and lower rate so that works for her..

post some more details!

 

[RitaE]

I'm not sure I agree with Lisa. You say you want to view how much you would save in refinancing vs what you are doing now. So what I would do is

Calculation 1 = What you are doing now.

Your inputs would be, loan balance, current interest rate, and the payments you are currently making. Principal + Interest + Extra Principal.

Do not include your escrows such as insurance and taxes. Note this is only a valid result if you absolutely always continue to make your extra principal payments. For your results see when the loan will be paid off and what your total interest paid will be.

Calculation 2 = A refinance

Your inputs will be loan balance (plus any refinance fees you roll in there), proposed interest rate and proposed term of the loan. Also ... do you plan on making extra principal payments there? If so, include them in.

For your total cost don't forget any other costs you might have ... appraisal fee, origination fee, etc etc.

Look again. How much total interest will you pay + added costs and when the loan will be paid off.

Then compare the two and decide if it is worthwhile to you to go to through the fuss.

 

[AllesonWonderland]

I can't help with pointing you in the right direction for the proper calculator, though I'm guessing there's one out there that lets you put in extra payments. I have a spreadsheet that calculates mine. We did a streamline refi last year, which lowered our payment, but I still had the same amount taken out each month. Plus I was also doing extra payments on top of that. When we looked at refinancing, I realized dropping the loan to a 15 year the payment was exactly what I'm already paying each month. (Regular payment plus all the additional I send over.) I did the calculations--even put in the closing costs as an additional principal only payment up front and figured out that I'll have my mortgage paid off in 16 years without the refi. So, at first that didn't sound like a big deal...maybe I'd rather have the freedom to pay extra when I wanted to instead of locking myself in. But then I multiplied out how much extra I'd be paying doing it on my own. Multiplying your monthly mortgage by 12-16 is a pretty large chunk of change! I know I could find better ways to spend that money. So, we're doing the refinance. I'll probably still challenge myself to make additional principal payments, hopefully I can have it paid off even sooner. Good luck with your research!

 

[cajunmommy]

RitaE - I actually ran four calculations....current note without extra toward principal (to see if it matched the projected amortization schedule), current actual payment, projected new rate/term with nothing extra, & projected new rate/term with payment equal to my current payments.

Like Alleson, we're looking at dropping from a 30 with 20years left to a 15. I know it won't take the full 20 to reach pay-off because of my extra principal payments. I was just curious if it was really worth the paperwork & costs involved. Comparing the rough numbers, it looks like it would save us a couple of years plus a significant amount of interest if we went to the 15. My actual monthly payment would drop, but I would continue to pay what we're paying now.

Looks like it's time to start making some serious phone calls!

 

[tink20]

No, u would not add the extra payments in!

You have to also look at how much longer u have on your current mortgage - how much do u have left with the x-tra payments u make.

How much is left on your mortgage..

i'm sure someone will jump in if u give more details -

i was looking into refinancing but seems its not worth it for me after the closing costs - i have about 62,000 left on my current mortgage and about 6 more years - though a friend of mine got an offer for a "no closing Cost" and lower rate so that works for her..

post some more details!

How do you get, "no closing cost" just curious. thanks

 

[timmac]

RitaE - I actually ran four calculations....current note without extra toward principal (to see if it matched the projected amortization schedule), current actual payment, projected new rate/term with nothing extra, & projected new rate/term with payment equal to my current payments.

Like Alleson, we're looking at dropping from a 30 with 20years left to a 15. I know it won't take the full 20 to reach pay-off because of my extra principal payments. I was just curious if it was really worth the paperwork & costs involved. Comparing the rough numbers, it looks like it would save us a couple of years plus a significant amount of interest if we went to the 15. My actual monthly payment would drop, but I would continue to pay what we're paying now.

Looks like it's time to start making some serious phone calls!

Without knowing the specific numbers, it's hard for any of us to give you perfectly accurate advice, but if your interest rate can drop substantially (like more than just a fraction of a percent) and you're not particularly close to loan pay off yet (which it sounds like you're not), then likely the closing costs are less than the total savings you'll get, so it's worth it.

Also, at risk of going slightly off the original topic, if your interest rate is low enough, try not to stress too much about how quickly you pay it off.. there's likely better things you can be doing with the money than throwing it against a low-interest loan.

 

[WeLuvDCL]

This one is great - http://www.bankrate.com/calculators/mortgages/amortization-calculator.aspx
You can do monthly extra payments or a one-time extra payment or both.

Just click on the amortization button and scroll all the way to the bottom to see totals.