Mortgage refi advise

[mdcrim]

I have a question (and am not great with numbers so could use some help). I am six years into a 30 year fixed mortgage at 5%. The original balance was $284900 and I think the balance is down to about $250000.

I have an opportunity to refinance to a 4.5% 30 year fixed with $3500 in closing costs.

If I refinance only the balance of my mortgage ($250000) my payments would go down by $273 per month. I would not refinance to the original balance.

Does this make sense? I know it would essentially start the clock over in terms of the amount going toward interest.

Would I be better off just staying where I am?

[maat55]

You have to look at it from a few angles.

How long do you intend to stay in the house?
What is my breakeven point?
What will you do with the freed monies?

If you look at it from an longterm perspective, you would add the total cost of the home after making all the payments, of both scenarios, taking in account what the extra funds might earn in an modest investment.

Shorterm, how long would it take to breakeven on the refi charges. It will cost you more in the shorterm, but overall you should come out better if you do not waste the extra monies.

I would do it if I were going to invest or save the difference and be in the home for more than 5 years.

[creditcardfree]

If overall you are looking to save interest you might inquire about a 15 year mortgage rather than a 30 year. Your payment likely would go up, but you would pay significantly less in interest than a 30 year.

I also wouldn't refi, if you plan to move in the near future, you would not recoup the closing costs.

Look for the calculators link on this site, to get an idea of your mortgage payment on a 15 year loan.

[tmvijai]

Quite frankly I wouldn't do it to pay dump more money as interest by taking 30 years loan whether you consider staying longer or shorter or does the closing cost break even quicker or not. It just me who thinks forward. I don't like to go backward to take another 30 year loan. You might even save money in the longer term because you are saving .5% in the longer term but you are wasting 6 years. THats just me.

GO ahead use the calculator(in my website also I do have few cals) to compare and get the idea and make a decision.

[mdcrim]

Thanks for the advice! I think I'm going to stay with my current mortgage.

[sandrark]

They also have 20 year mortgages - cheaper than a 15, but with more principal payment than a 30.

It's what we did, and as an intermediate step, it was a good choice. It shaved years off the mortgage, and it accelerated our principal payments.


Sandi