Quote:
Originally Posted by sweetZ4me
This feedback has been wonderful. No, the mortgage does not balloon, and the interest rate is fixed for life of the loan.
Do you all recommend that we refinance to a traditional mortgage even if we could up the principal each month on this interest only loan?I checked out an ammortization table and plugged us in at 15 years, fixed, same 6.5% and it says $1480.00 monthly for the 15 years to pay off the balance. So, if I did that and just kept the interest only but put the $480 toward principal each month, would it work out about the same? I hope what I am asking makes sense. We are 2.5 years into this mortgage, if that info matters.
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Do a 15 year fixed based on todays principal balance and that will give you estimated payment to pay off in 15 years. How $480/month would work would depend on many factors which I do not know and would need an ammortization schedule to plug into. The $200 payment over last 2.5 years would also have changed things- this may or may not have been high enough to pay down principal on a 15 yr fixed schedule. In addition it depends if you paid $200+principal owed or kept the payment fixed (if interest owed is $1300 and you pay $200 extra, do you send $1500 each month, or when interest goes down, do you decrease payment)?
Download an ammortization table (blank) from microsoft and plug in your numbers. It will allow you to change monthly paydown amount each month or make regular extra payments.
http://office.microsoft.com/en-us/te...dule&av=TPL000
Once you get the spreadsheet set up for 6.5% and can pay it off in 15 years, then look at refinancing. Sum the column with principal payments made (should equal cost of mortgage- this is a check to make sure you set up spreadsheet correct). Sum the column with interest payments made.
If new rate is 5.5% look at that ammortization schedule. Sum the principal payments made. Sum the column with interest paid. Compare to 6.5% schedule currently.
My guess is you would need to save .5% on interest rate to see a big enough difference to refinance (based on closing costs).
I think 15 yr fixed mortgages are running at around 6% right now, depending on credit.