would you refinance to save $9,900?

[imgoingtodisney]

DH isnt sure if this is a good thing or not !
Current mortgage 7.25% for another 21yrs - $613.92 princ & int
Redone would be 5.375 for 15yrs - $648.37 princ & int

But we would need to pay $3,000 closing which is figured into the redone mortgage

 

[Cindy B]

You can't do better than 5.3%? Wwe just bought a house and got 4.6%.

To me savings is savings, but the 3K in closing, is that "rolled" in with your new payment? I'm confused about your post there.

 

[janette]

You might to just as well to pay extra on the principal and pay off your current mortage early. It would also save you money but not cost you anything.

 

[imgoingtodisney]

yes the 3,000 closing cost would be rolled into the new monthly payment

However, if you take the current mortgage (252 more months and multiple by $613.95)
then subtract the revised mortgage (180 months and multiple $648.37)
you get a difference of $38,011

looking at it that why how can one not refinance?

The 9900 savings would be if we added our own $100 every month to cut it down to 16yrs.

 

[cruisnfamily]

Definitely Do IT!

In my former life (before I became a SAHM) I was a bank manager and am quite familiar with mortgages, etc. It sounds like this is well thought out and researched on your part. The only reason not to do it is if you plan to sell within 5 years. If you plan to be there more than that then you absolutely without a doubt need to do the refinance thing.

There are all kinds of calculators and rules of thumb and stuff but the bottom line is that in your situation it sounds like it makes sense and would benefit you. What exactly are hubby's arguements/concerns....maybe we could address those and get him on the refinance wagon with you.

Also, is there any way you can come up with some of those closing costs so you don't have to finance them? Have you shopped around with different lenders for the best deal? The bottom line is the rate though....maybe somebody has the same rate with lower costs.

 

[disneygals]

Hi,

We just did the same thing. Had been prepaying a 30 year mortgage for 9 years and the rates finally went low enough so we could save more by refinancing than continuing to pre-pay.

We switched to a 10 year. Have you looked into that?

Good Luck

 

[imgoingtodisney]

the only way to get the refinance cost would be by taking it out of retirement. We're already looking at taking money from here to pay for new bifocals for both of us, partial bridge for DH, painting the house, etc.
DH just doesnt see any reason to pay the closing costs. But what would happen if I start saying "we really cant afford the extra $100 this month so I wont send it" ? With the mortgage we'd have to send it in.

 

[Steve H.]

If you plan on staying in your house a long period of time, it's always a good idea to refinance. The general rule of thumb is you need to stay in your house enough months to make the interest savings > the closing costs (no matter how you pay them).

BTW, did you just say you're borrowing against your 401K for glasses, dentures and house painting? I would advise against that and would recommend just getting a home equity loan instead.

 

[Disney845]

I was just confused by your last posting. you said what if we couldn't afford the extra $100 this month... but based on your calculation it looks like refinancing only tacks about $35 onto the payment. Either way, saving $38,000 or $9,000 is a huge amount of money...think how many WDW vacations you could take!!!

 

[Cindy B]

Originally posted by Steve H.
If you plan on staying in your house a long period of time, it's always a good idea to refinance. The general rule of thumb is you need to stay in your house enough months to make the interest savings > the closing costs (no matter how you pay them).

BTW, did you just say you're borrowing against your 401K for glasses, dentures and house painting? I would advise against that and would recommend just getting a home equity loan instead.

I'm echoing Steve as well... why take out for needed home repairs, why not a HEL as well?


Think of all the penalties you will be incurring for that.

 

[frannn]

I just refinanced a few months ago, went from 8.125 to 6.125, cost a few thousand, but we took 4 additional years off our loan. We won't be moving for at least 9 years, so it was worth it. We also put the refinancing cost back into the mtg, and we pay an extra 50 each month as well. The other good thing about our refinancing- our house went up in value enough for us to not have to pay mtg insurance any more. There's a funny story that goes along with this-I was 9 months pregnant when I set the appointment to sign the closing papers. I made the appointment a day or so after my due date because I am usually late- turned out the notary had to come to the hospital for me to sign the papers! Good luck with whatever you decide. I am so jealous cause your payment is SO much lower than mine.

 

[Lorix2]

We just refinanced and went from 8% to 5.875%. From a 30 year to a 15 and since we had the equity, eliminated PMI. My monthly payment only went up by $13.00.

We didn't pay points. We financed the $1700.00 closing costs and took $5000.00 for ourselves for house renovations.

I'm so glad we did this. Savings is savings.

 

[aprincessmom]

the only way to get the refinance cost would be by taking it out of retirement. We're already looking at taking money from here to pay for new bifocals for both of us, partial bridge for DH, painting the house, etc.

If you are using withdrawals from a retirement fund to pay for necessities/life's basic requirements then you need to seriously re-visit your household budget and find areas you can eliminate or reduce costs.

The penalties and tax consequences should you find yourself unable to repay the loan are high and the risk is even higher.

 

[cruisnfamily]

Why don't you refinance with cash out for the glasses, bridge, painting etc? I'm sure if you took $5000 out, your payment still wouldn't be going up that $100 you're thinking of sending extra on your existing.....Dh is not seeing something clearly here...it is definitely worthwhile to do and the cash out is a great way to cover your other expense without borrowing against retirement or a home equity.....Go for it!

 

[believe]

$3000.00 for closing cost We are refinancing from 20yrs to 15yrs and the closing cost are only $800.00. We are going down 1% in our loan. It is well worth it. With the extra payment we make each year this loan will be paid in less than 15 yrs, just in time for the girls to begin college . Anytime you can save money, do it.

 

[pollyanna]

Echooing everyone else...look around for another Financial Institution with better rates and closing costs...and only do it if you are SURE this is the house you'll stayin for several more years.

Digging into retirement funds for necessities means the budget needs to be looked into(and maybe the logic of having dumped thousands $$ into DVC might not have been a smart move)...Necessities are glasses ,dental and cleaning your septic tank..not a yearly cruise/WDW vacation.