I talked to my mortgage guy ( a couple of mortgage guys). We qualify for a 2.75 percent 10 year loan if we refinance. closing costs are about 2200, although they won't know until we are into the underwriting process if we'd need to pay for an appraisal. Our current rate is 4.875 percent.
I spent a lot of times on mortgage calculators trying to figure out how much we'd actually save in interest with a refinance. I think we are still on track to have this loan paid off in about 4 years. (Most of the calculators don't account for that). I did find one calculator that let me do a straight amortization table on our current balance, with 4 and 5 year estimated pay off times, at the two different interest rates. And, the interest savings from a refinance weren't as great as they appeared at first.
Seems like we'd save about 4,000 in interest, minus the 2200 closing costs, so less than 2000 to go through the hassle of refinancing. Yes, that is real money, but I'm not sure it's worth going through the process if that is the result. What do you guys think?
Or, have you seen any other calculators out there that will help me work out the actual savings?
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In other news, I managed to sock away my first savings of the new year. (hazzah!)
$200 to kid 1's 529 and $300 into my IRA. I anticipate sending a bit more next week, but I'm shuffling some bills through the checking account, as well as transferring the savings from the ef to the new online bank, and need to see what it looks like when the dust settles.
Refi looks like a no-go?? Advice
January 8th, 2013 at 10:16 pm
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January 9th, 2013 at 12:12 am 1357690377
January 9th, 2013 at 03:06 am 1357700804
You might consider a 5 year home equity loan, plus opening a heloc. Just in case you couldn't make the payments for whatever reason, you could borrow a bit on the heloc. Effectively, you would be transferring the principal you could not pay to a slightly higher rate. According to the website, the heloc charges prime, but with a floor of 3.75%. If you never need to use the heloc, it wouldn't cost you anything to have it open. If you did need to use the heloc, the higher rate on the small balance wouldn't outweigh the benefit of the moving the bulk of your mortgage debt to 1.99%.
I'm sure you'll do fine no matter what you decide.
January 9th, 2013 at 03:42 am 1357702935
January 9th, 2013 at 04:33 am 1357705991
Basically, less than $40 a month for the hassle factor was not worth it.
PS. We're ahead of schedule, so it is quite possible the refi would have cost us a little money instead of saving a little money. I didn't bother to do a complete amortization on the existing loan assuming interest diminuation as I paid it off, so my interest paid is actually less than I had calculated.
January 9th, 2013 at 02:57 pm 1357743430