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eg8r
12-02-2010, 05:49 PM
If you could refi your house and go from a 30 year to a 15 year mortgage, lower the interest rate by 2 points and only increase monthly payment by $150/month would you do it?

I have never refi'd before to increase my monthly payment but I like the idea of a 15 year over a 30 year.

eg8r

cushioncrawler
12-02-2010, 07:35 PM
I wonder if a 2wk repayment period iz possible and better????
mac.

Sid_Vicious
12-02-2010, 08:36 PM
How many years into your 30 year note are you right now? I ask, because the way the interest is paid up front in the mortgage business, you could be on the downside of the interest payments, and you'd be better adding extra $$$ to each month on the existing 30yr note and saving a lot of overall interest in a new note.


sid

eg8r
12-02-2010, 10:48 PM
We are about 5 years into it.

eg8r

eg8r
12-02-2010, 10:50 PM
Do you mean bi-monthly payments? If so then that is equivalent to paying one extra payment a year and yes it does cut the time down on repaying the loan but not down to 15 years.

I think at this time I am probably going to pass just because I don't want to add any to my monthly payment and I will just pay the extra amount as we go.

eg8r

Gayle in MD
12-03-2010, 12:10 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: eg8r</div><div class="ubbcode-body">Do you mean bi-monthly payments? If so then that is equivalent to paying one extra payment a year and yes it does cut the time down on repaying the loan but not down to 15 years.

I think at this time I am probably going to pass just because I don't want to add any to my monthly payment and I will just pay the extra amount as we go.

eg8r </div></div>

On a thirty year mortgage, you can pay it off in 15, with two extra principle only payments a year.

Refinancing generally speaking, has a five year, two point, justification, If you are going to own the home for at least five more years, and save two extra interest points, it justifies refi costs.

In this market, one would probably want to study further...but generally speaking, the only other important factor is location.

eg8r
12-03-2010, 07:37 AM
My guess is that we are going to be staying in the house for quite some time. No plans on moving any time soon but I think right now I am going to just keep what I have and continue paying what I am paying. I don't think I want to add any more to my monthly payment in case for some reason I have trouble making a payment.

eg8r

Stretch
12-03-2010, 10:54 AM
I have never lived anywhere that required more than 1 weeks pay out of the month to look after. bills, payments,food and gas ususlly gobble up 2 more weeks, and the last week is mine. It's a formula that has never failed. St.

Gayle in MD
12-03-2010, 10:56 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: eg8r</div><div class="ubbcode-body">My guess is that we are going to be staying in the house for quite some time. No plans on moving any time soon but I think right now I am going to just keep what I have and continue paying what I am paying. I don't think I want to add any more to my monthly payment in case for some reason I have trouble making a payment.

eg8r </div></div>

Right, and the thing is, you can pay off 30 year, in 15 years, just by making two extra principle payments, a year, without changing anything. It would be entirely optional, and you wouldn't have to sign onto to any commitment, to continue to do so, in order to do it, your choice.

Unless you took a mortgage that includes language which mandates a fee for making extra principle payments, it's a great way to go, as long as your current interest rate is at least as low as, six to six and a half, percent.

One should always take only mortgages which do not mandate extra fees, fines or charges for making extra principle payments, or early payoff...

G.

eg8r
12-03-2010, 11:10 AM
I like it. We have been living that way for about the last year and a half. This month we have 3 paychecks that are "ours". I use that for retirement, kids college funds and paying down the house. We have been following Dave Ramsey's program (which is what prompted this 15 year refi idea) and his recommendation is for your house payment to be no more than 25% of your monthly income. When I talked with the mortgage broker he said one of the loans only works if my mortgage is greater than 55% of my income. I laughed and said heck no, it is actually about 9%. He was a bit surprised and asked why the refi and I told him that I am always looking to shave off interest payments. /forums/images/%%GRAEMLIN_URL%%/smile.gif

eg8r

eg8r
12-03-2010, 11:13 AM
Our mortgage does not penalize for early payoff. I think we are going to just keep doing what we are doing and always make sure the minimum is 2 additional principle payments a year.

eg8r

sack316
12-03-2010, 11:19 AM
<div class="ubbcode-block"><div class="ubbcode-header">Originally Posted By: eg8r</div><div class="ubbcode-body"> This month we have 3 paychecks that are "ours". I use that for retirement, kids college funds and paying down the house...</div></div>

That's gonna be the key to your decision right there. Sitting down and crunching numbers and deciding which will provide greater long term value for you.

The refi will sound good, knocking off interest payments right now and being paid off in half the time. But are the long term savings in doing that greater than the work you can make the extra money in your pocket each month right now do (via investment, retirement, paying for kids college, keeping low or zero balances on credit cards and other loans, etc.)

I'm not sure which is best for you and your family, but definitely gotta take all things into consideration. But it does sound to me like you are doing good things with the other 91% of your income right now... which could be more valuable in 15 years than what you would gain in 15 years from the refi. JMHO

Sack

eg8r
12-03-2010, 11:24 AM
I agree.

eg8r