Question: Should i refinance my current mortgage from a 30yr 5.87 to a 15yr 4.45 or should i just pay extra to my curren?

(Posted by: Cuti on 2010-03-08 07:58:42)

My current mortgage is 187, 000 and I was thinking about putting 37, 000 to the principal to make the loan only 150, 000 and then refi it to a 15 year loan at a rate of 4.45 percent. my current montly payments and new monthly payments would be about the same, but I would finish my loan in 15 years rather than the 26 years I have left. I am trying to finish the loan asap

Posted by: Steve D on 2010-03-08, 08:05:41

Not quite enough info to go on, but just guessing, the re-fi would probably be advantageous. What you need to determine is how putting the $37,000 into the current mortgage would change the term and payoff versus the re-fi. Call the bank, ask them to re-calculate the amortization schedule based upon a one-time $37,000 payment. Then compare what they give you against an amort schedule for the 15 year re-fi. Compare the total interest paid to the end of both loans and that will be the deciding factor. If you want to be more accurate, calculate the tax savings for whichever loan ends up costing you more - remembering that interest on mortgages is tax deductible when you itemize (this of course, is only valid when you itemize).

Posted by: golferwhoworks on 2010-03-08, 08:05:06

Interest is the time value of money. If the closing cost are not too high then it is ok but I personally would not do this if there was ever a chance that I might need some extra cash in a pinch and be forced to send in the higher note payment. Just send extra

Posted by: glenn on 2010-03-08, 08:09:38

I am 57 and know a lot about myself. If I left it at the old term- I would rarely if ever send the extra money in. There would be an excuse every month. I would need to set it up so that it is required and automatic to get my home paid off fast. If this is also true with you then I would refinance.

Posted by: kemperk on 2010-03-08, 08:21:11

No invest your 37k into something super secure that pays 12+ %. Use that return to quickly pay down your mortgage. I can guide you further, free

Posted by: Doctor Deth on 2010-03-08, 11:11:53

If you have an extra $37,000 lying around (plus refi fees), do it