I am currently 5 years into a 30 year/3.25% Mortgage. Plan on staying here for a long time. Was considering re-financing and taking a lower rate, but now feel i dont want to start over again.
Options: Refi to a 20 year/2.625% which increases my monthly payment by $180
Or do I just increase my payment by same amount (or more) and get pretty close to that?
How does one determine what to do in this situation? Ive gone back and forth with what is best, but part of me thinks to keep the flexiblity, keep the rate I have and just boost payment to an even $2000/month and shave about 4 years off my mortgage. But is that the wrong way of thinking? Am I leaving money on the table? I Know we can talk in circles about what do I do with the additional money, but i've been saving, and putting into lifestyle purchsaes, about to do a big purchase home improvement, not trying to take money out for refi, just be practical.
Is it worth Refinancing to Shoter term/lower rate or just pay additional princ/each month?
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Re: Is it worth Refinancing to Shoter term/lower rate or just pay additional princ/each month?
What are the closing costs for the 20 year loan?
You need to factor that and see what interest amount you will save when you compare the remaining interest of current loan and the total interest you will pay over the term of the new 20 year
You need to factor that and see what interest amount you will save when you compare the remaining interest of current loan and the total interest you will pay over the term of the new 20 year
Re: Is it worth Refinancing to Shoter term/lower rate or just pay additional princ/each month?
Even if you refinance to the same term, you have the option of paying extra principal so that you pay the loan off on the original date. Effectively, this would be refinancing to what you plan to treat as a 25-year mortgage, despite the 30-year stated term.
But if you have enough cash flow to refinance to 20 or 15 years, it's probably worth refinancing. In particular, if you are planning to pay enough in extra principal to clear the loan in 20 or 15 years, you might as well refinance so that you pay less interest while paying it off.
But if you have enough cash flow to refinance to 20 or 15 years, it's probably worth refinancing. In particular, if you are planning to pay enough in extra principal to clear the loan in 20 or 15 years, you might as well refinance so that you pay less interest while paying it off.