Should I refi? Help me run the numbers

[disneysteve]

Current loan balance: $96,540.47
Remaining term: 19 years, 4 months
Current rate: 5.875%
Current P&I payment: $697.17

We plan to live here indefinitely. We can currently put an extra $100/month toward the home loan. My goal would be to retire the loan sooner.

What rate should I be looking for that would make it worth going through the hassle of refinancing?

Thanks in advance.

[jIM_Ohio]

Drop current payment by 8% saves you one payment per year.

$642/mo would make sense... keeping same payoff date as you have now.

I have 4.75% as the rate you would need to get to save 8% on new payment (keeping 19 year payoff scenario).

[noppenbd]

Depends on closing costs. I ran a calculator that said you would breakeven at 93 months if you refinanced to a 15-yr @ 5.0% with 4000 closing costs. Obviously the loan is paid off earlier too. @ 5.125% the breakeven goes to 109 months. If you can get below 5% I think it is a no-brainer, as long as the CC are reasonable.

[disneysteve]

Originally Posted by noppenbd

I ran a calculator that said you would breakeven at 93 months if you refinanced to a 15-yr @ 5.0% with 4000 closing costs.

Is that with or without paying an extra $100/month to principal?

[jIM_Ohio]

Originally Posted by disneysteve

Is that with or without paying an extra $100/month to principal?

when I ran the numbers...

15 yr fixed has a payment plan of 180 payments
your current mortgage with $100 extra pays off in 182 months (228 months without the extra $100).

I would not refinance to 15 yr fixed at 5% (you gain nothing from current situation and owe $4000 for the right to gain nothing).

15 yr fixed payment is $763.44
if you send the extra $40 (because you are currently paying $797), the loan pays off 13 months sooner (167 months instead of 180).

Note my calculator assumes 19 years of payments, not 19 and 3 months, so that might account for a few numbers being a month off.

[KellyB]

Steve,

It's probably best to contact a few lenders and have them run all the numbers for you, as they will include closing costs, fees, etc. I went though bankrate.com and had a few lenders call me. When we ran the numbers the rates are still not low enough for me to refi. (I have 15 years left on a 20 year 5.5% mortgage, I wanted to see if I could drop to 10 years. I was NOT interested in going out further to lower my payment - my focus was less years, less rate. But it would cost me too much monthly to do it. So I will do what I can month to month.)

[sweeps]

Find a lender that will do a no-closing-cost refi for you, and the math is simple.

[GREENBACK]

Originally Posted by sweeps

Find a lender that will do a no-closing-cost refi for you, and the math is simple.

Many years ago I did this "no cost" thing and ended up spending well over a grand. I wasn't real smart about those things at the time but it sure made me aware that these things aren't as "free" as they sound.

[jIM_Ohio]

steve- check PENFED.

If you qualify to be a member, their rates on many things are usually the best I have seen.

[sweeps]

Sorry about your experience, GB. However, I've refi'ed several times with my broker and it has never cost me a penny. The only catch is that I don't get the absolute lowest rate available. If the going rate is 5%, I have to settle for 5 1/8% or 5 1/4%. But I'm okay with that.

[MonkeyMama]

If it were me, I would run an amortization schedule for the new loan, assume you continued old loan payments (extra principle) and see if you could shorten the length of the loan. OF course, you have to consider costs.

Of course, the problem right now is that 15-year rates are not very favorable. But could be worth refi-ing to 15 years in your situation. Maybe get 4.75%? You could probably get 4.75% for a 30-year loan anyway.

-----------------

Okay, you provided enough info. I show $800/month at 5% would pay the loan off in 14 years. (Loan amount at 5%, comes to about $500/month. You'd prepay $300/month). I'd say it's a go, as long as fees are reasonable.

BTW, I am pretty sure a 15-year would be a better bet for you. Payments would probably be less than $800 anyway. (Today my CU is offering 5% 30-year and 4.625% 15-year. That's a bigger spread than I have seen lately). Yeah - I'd try for 4.5% 15-year. Even 5% is only $763/month. I am just plugging numbers in excel in an amortization template.

My only tip is start shopping around. Rates are VERY volatile and you want to find someone who will keep your app open for a while or let you lock in a good rate ASAP. We had to sit and wait a year. WE were trying to get 5%. We ended up with 4.875%. But yes, we waited a year to lock it in, because we missed the boat in early 2008, when rates were low for 5 minutes.

Another tip is to talk to your current lender first and see if they can do a loan modification. (They may just lower your rate to keep you - maybe a small fee).

[momof1in150]

Originally Posted by MonkeyMama

My only tip is start shopping around. Rates are VERY volatile and you want to find someone who will keep your app open for a while or let you lock in a good rate ASAP. We had to sit and wait a year. WE were trying to get 5%. We ended up with 4.875%. But yes, we waited a year to lock it in, because we missed the boat in early 2008, when rates were low for 5 minutes.

Another tip is to talk to your current lender first and see if they can do a loan modification. (They may just lower your rate to keep you - maybe a small fee).

This is what our Mortgage Broker is doing for his clients. He is uploading the application and when the rates go low (they are changing up to 4 times a day) he locks as many loans in as possible. He doesn't charge for the application until he can get the loan locked.

[jIM_Ohio]

Originally Posted by MonkeyMama

If it were me, I would run an amortization schedule for the new loan, assume you continued old loan payments (extra principle) and see if you could shorten the length of the loan. OF course, you have to consider costs.

Of course, the problem right now is that 15-year rates are not very favorable. But could be worth refi-ing to 15 years in your situation. Maybe get 4.75%? You could probably get 4.75% for a 30-year loan anyway.

-----------------

Okay, you provided enough info. I show $800/month at 5% would pay the loan off in 14 years. (Loan amount at 5%, comes to about $500/month. You'd prepay $300/month). I'd say it's a go, as long as fees are reasonable.

BTW, I am pretty sure a 15-year would be a better bet for you. Payments would probably be less than $800 anyway. (Today my CU is offering 5% 30-year and 4.625% 15-year. That's a bigger spread than I have seen lately). Yeah - I'd try for 4.5% 15-year. Even 5% is only $763/month. I am just plugging numbers in excel in an amortization template.

My only tip is start shopping around. Rates are VERY volatile and you want to find someone who will keep your app open for a while or let you lock in a good rate ASAP. We had to sit and wait a year. WE were trying to get 5%. We ended up with 4.875%. But yes, we waited a year to lock it in, because we missed the boat in early 2008, when rates were low for 5 minutes.

Another tip is to talk to your current lender first and see if they can do a loan modification. (They may just lower your rate to keep you - maybe a small fee).

Agree with all of above

But this might NOT be the rate bottom. I don't have 80% equity, so refinancing for me below my current 5.75% is tough... but I will be looking into it over the weekend.

[MonkeyMama]

No, it may not be the rate bottom. But, um, "lowest rates ever" is good enough for me.

I am not a gambler.

But yeah, I just want to be clear. Don't take my advice and be mad when rates drop more. Hehe. I never said it was the rate bottom (Covering my butt here).

We thought 5.75% in 2003 was the lowest we'd ever see. I am so sick of refinancing, really. But it is a tremendous opportunity to lower costs. I just really would like this time to be the last time.

[maat55]

100K at 5% for 15 years is a payment of 790.79

[jIM_Ohio]

Originally Posted by maat55

100K at 5% for 15 years is a payment of 790.79

I had something close to this too.

[disneysteve]

Originally Posted by MonkeyMama

I am so sick of refinancing, really. But it is a tremendous opportunity to lower costs. I just really would like this time to be the last time.

Same here. I don't really like the thought of going through the process again. This would be the 3rd time we've refinanced plus the original purchase, so our 4th mortgage on the house. I want to make sure it is really worth it before I go through it again.

[Gjowers]

There are some really great financial calculators here:

Financial Calculators from Dinkytown.net