WWYD? refinance ?

**lovestoread** · 01-15-2009, 12:41 PM

We are currently in a 6%fixed rate 30 yr mortgage with 23 yrs left. Should I try to refinance on a 20 yr loan? I don't think I could afford a 15 yr. Thanks for your help......

**Greebo** · 01-15-2009, 01:28 PM

Wow, good question.

Ok, lets assume you can get a 5% rate today. Lets further assume your original mortgage was for $100,000. Your payment up till now would have been $599.55 and you have paid $40,000~ in interest and the new balance is $89,639.39. If you pay this loan as is till the end you will pay a total of $115838 in interest, or another 85,838 over what you have already paid.

If you refi to a 20 year, the new payment on 89,639 would be $592. Over the next 20 years you will pay $52,339 in interest, so you'll save over $37,000 in interst, but you'll pay closing costs which will offset your savings some.

Yes, I'd refinance to a 20 year in a heartbeat.

If you refi to a 15 year, however, your monthly pmt will be $709 and your total interest paid will be $37955, so you'll save closer to $52,000 if you pay $100 more a month. That's your best option.

**JustJoy** · 01-15-2009, 01:30 PM

DH and I have been thinking the same thing. We have a 30 yr fixed rate @ 6.25% We are seriously considering refinancing to a 20 yr fixed rate.

**lovestoread** · 01-15-2009, 01:35 PM

Greebo, my original loan was for $79800.00, with a payment of $604 with property taxes and insurance with it. What would my payment be on a 15 yr? Do you think I could get them to drop the closing costs, or is that just wishful thinking...and should I go with my current mortgage company?? They keep telling me to call them about refi.....

**BlessedMomof2** · 01-15-2009, 01:59 PM

When we refinanced our house a couple years ago, we went with the same mortgage company, and they waived the closing costs.

I'm not sure what I would do, it would depend on the interest rate, and the monthly payments (if we could afford it).

Good Luck with your decision!

**Greebo** · 01-15-2009, 03:14 PM

Originally Posted by lovestoread

Greebo, my original loan was for $79800.00, with a payment of $604 with property taxes and insurance with it. What would my payment be on a 15 yr? Do you think I could get them to drop the closing costs, or is that just wishful thinking...and should I go with my current mortgage company?? They keep telling me to call them about refi.....

Since I started with 100k as the example and the payment on a 15 year went to 700 from 600, without going to the calculators I use, its a safe bet that if your payment now is 600 with taxes and insurance, then the 15 year w/ T&I would still be around 700.

No, you won't get to eliminate closing costs, but you can probably get them to roll them into the loan.

Do you like your current mortgage company? Because if I were you, I'd shop around to get the best rate and closing cost combination I could.

**FrugalMomof3** · 01-15-2009, 06:05 PM

I agree with greebo, refinancing now might be in your best interest and search around for comparison loans.

**lovestoread** · 01-15-2009, 06:18 PM

+I am with......Countrywide......(I know, I know,), been with them for several years and really have no complaints at all....they keep sending me letters to refinance, and I thought I read somewhere you should first check with your current mortgage holder ..... should I check locally , we live in a very small town, 5,000 or so....

**scottp999** · 01-18-2009, 06:57 PM

Watch 30 year rates. 30 year rates have been at or below 15 year rates a few times in the last 3 weeks. The federal reserve has been artificially reducing the rates by buying large amounts of agency (fannie and freddie) 30 year mortgage backed securities.

If you can get a 30 year at the same rate as a 15 year I think it's better to just run your own 15 year amortization schedule, and send in the extra principal on the 30 year to make it a 15 year. That way if you ever have a reduction in income you can opt to pay the 30 year payments.

Today the rate only has a 1/8 spread (12.5 basis points or .0125%), but as I said they have been equivalent and the 30 has actually been less than the 15 a few times. Right now at Wells Fargo the 20 year has a higher rate than wither the 30 or 15.

When the federal reserve places artificial demand on agency MBS at an artificial price (higher price than the market would bring) the interest rate goes down.