Explain to me the what the benefits are to REFI - I am just not getting it.

[Anonymous]

So my house is at a 6% interest rate - and I know that we could refi it and probably free up $350 from our mortgage a month. We plan to stay in the home another 6 years or so. DH is not inclined to do it because he is telling me that currently we are paying more on our principle and if we REFI we will no longer be paying as much on our principle.

I sort of see his logic. But aren't we paying more unnecessarily currently with the higher interest rate?

[Anonymous]

How many years are left on your loan?

[Anonymous]

You can always pay the same amount towards your principal - it will just mean paying more than the minimum. But your monthly payment should go way down, which also would give you more cash every month if you so chose.

[Anonymous]

It does restart your amortization schedule so your DH is right in that respect. However if you refi and the payment drops by $350, you can continue paying the original payment and your principal balance should drop even faster.

Here's a great calculator to play with the numbers. You should click Show Amortization Table to see how much principal you would be paying with the new loan (after you plug in the numbers).

http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx

[Anonymous]

OP HERE - it was a 30 year mortgage to start and we are 8 years into it. So quite a bit of time left on it.

[Anonymous]

We were in a similar position. We refied to a 15 year. We pay about the same amount per month as we did before. Assuming a change from a 6% loan to a 3% 15 year loan (which is what we got) on $440,000 as a starting ($381k at time of refi), we would owe $318K in 2019 (6 years from now, the time you want to sell) on the old loan and only $234K on the new loan. That is an extra $84k of equity in just 6 years!!! Wait longer, and the savings are even more. You would be foolish not to refinance!

[Anonymous]

Anonymous wrote:We were in a similar position. We refied to a 15 year. We pay about the same amount per month as we did before. Assuming a change from a 6% loan to a 3% 15 year loan (which is what we got) on $440,000 as a starting ($381k at time of refi), we would owe $318K in 2019 (6 years from now, the time you want to sell) on the old loan and only $234K on the new loan. That is an extra $84k of equity in just 6 years!!! Wait longer, and the savings are even more. You would be foolish not to refinance!

Your payments were the same or more? We would like to free up cash but if the payment was the same we would take at 15 year.

[Anonymous]

Yes to 14:12. Refi to a 15 year -- you'll lower your rate AND pay it off sooner.

[Anonymous]

Anonymous wrote:OP HERE - it was a 30 year mortgage to start and we are 8 years into it. So quite a bit of time left on it.

You would be crazy not to refi.

You could probably get a 15 year mortgage and still end up paying a similar amount or less.

[Anonymous]

OP - I would see if you can afford to switch to a 15-year mortgage, which has lower rates. You'd then have your mortgage paid off 7 years earlier if you stayed in the house.

I refied twice in the last year because I had just started a new 30-year mortgage so resetting it twice wasn't a big deal. I'll still be mortgage free by 70 instead of 68, and the difference was enough to save me about $350 per month - which is $4K a year, or $60K for the 15 years I'm likely to keep the house. (I periodically transfer the savings from my checking account into savings.)

[Anonymous]

I am shocked you are still at 6%. It is simple math of what interest you are paying on your principal balance. Refi to a 15 (or 20) ASAP.

[Anonymous]

Anonymous wrote:I am shocked you are still at 6%. It is simple math of what interest you are paying on your principal balance. Refi to a 15 (or 20) ASAP.

Agree. 6% is just throwing money in the street. At a minimum you could apply the $350/month to principal on a 30-year and your amortization schedule would be shortened.

[Anonymous]

Anonymous wrote:

Anonymous wrote:We were in a similar position. We refied to a 15 year. We pay about the same amount per month as we did before. Assuming a change from a 6% loan to a 3% 15 year loan (which is what we got) on $440,000 as a starting ($381k at time of refi), we would owe $318K in 2019 (6 years from now, the time you want to sell) on the old loan and only $234K on the new loan. That is an extra $84k of equity in just 6 years!!! Wait longer, and the savings are even more. You would be foolish not to refinance!

Your payments were the same or more? We would like to free up cash but if the payment was the same we would take at 15 year.

Our payments were the same. You would have to do the math for yours (it takes as long as it took for me to write my earlier post) to see the exact numbers for yours. But, I think it is pretty incredible, and financially irresponsible, that you are still in a 6% if you could have refinanced earlier. We were prevented from refinancing earlier because of various lending restrictions, and we did so the minute we could because it is saving us way over a hundred thousand dollars. Moreover, we will now be mortgage free by college time!

[Anonymous]

Anonymous wrote:OP HERE - it was a 30 year mortgage to start and we are 8 years into it. So quite a bit of time left on it.

We had exact same numbers as you and did a 15 year refi at 3.25. Our payment went up $100, but we shaved 7 years off. Just crunch the numbers to see what is best.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP HERE - it was a 30 year mortgage to start and we are 8 years into it. So quite a bit of time left on it.

We had exact same numbers as you and did a 15 year refi at 3.25. Our payment went up $100, but we shaved 7 years off. Just crunch the numbers to see what is best.

Who did you use? We are currently with Navy Federal so no PMI involved, but I don't think that they will give the best deal on a REFI.