ok let's run the numbers. current mortgage is a 30 year loan of which i've paid 2.5 years off. current rate is 6.5%. if i let this loan run it's course i'll probably be 6 feet under before it's due. i can get a 15 year loan for 5.5% for about $380 more a month. should i do it?

Is the 15 year loan at 5.5% FIXED?

If you bought 2.5 years ago, you may have lost considerable equity with the downturn in home values. Will your house appraise for at least the balance remaining on your current mortgage?

Do you plan to remain in that house for the long term?

Can you easily afford the additional $380 per month without sacrificing your retirement saving plan?

Have you factored in the costs associated with the refi (points, appraisal, miscellaneous fees)? It can run into the thousands of dollars.

I know you're around my age, and the idea of having my house paid off by the time I retire would be great. So if you can answer yes to everything above, I'd say go for it.

add to what aratinga said :
With your current loan , are you able to make higher paymwents than you currently make without penalty ?
If you paid 380/mth more on your current loan - how soon would it be paid off ?
Have you worked out the value of staying with an existing loan - ie have a look at how a table mortgage works and realise than you will be restarting from year 1 again with the very high % of payment being interest ...

tinga yes it's a fixed loan. in 2006 housing was at it's peak but i put a considerable amount down so yes my house will appraise for at least the balance of the loan. yes i plan to die in this house. yes i can easily aford the extra $380 a month. i added $4,000 to the existing loan amount to come up with the new loan amount to take into account the refinancing fees.

Is the 15 year loan at 5.5% FIXED?

If you bought 2.5 years ago, you may have lost considerable equity with the downturn in home values. Will your house appraise for at least the balance remaining on your current mortgage?

Do you plan to remain in that house for the long term?

Can you easily afford the additional $380 per month without sacrificing your retirement saving plan?

Have you factored in the costs associated with the refi (points, appraisal, miscellaneous fees)? It can run into the thousands of dollars.

I know you're around my age, and the idea of having my house paid off by the time I retire would be great. So if you can answer yes to everything above, I'd say go for it.

Brett i'm not sure what you mean by penalty? i can afford it. if i paid $380 more a month it would be paid off in half the time. 15 years. not sure what a table mortgage is.

add to what aratinga said :
With your current loan , are you able to make higher paymwents than you currently make without penalty ?
If you paid 380/mth more on your current loan - how soon would it be paid off ?
Have you worked out the value of staying with an existing loan - ie have a look at how a table mortgage works and realise than you will be restarting from year 1 again with the very high % of payment being interest ...

Well heck, then... I can't see a reason not to go for it. I've been reading that fixed rate mortgages may very well dry up and go away forever in the near future.... probably right around the time I can actually afford to buy a house. Get one while you can!

I'm pretty sure your banks work the same as ours .
Table mortgage - basically
you pay the same payment every month - initially you payment is mostly interest - as you get closer to the end of the loan your payment is mostly principal .
Banks absolutely love people to refinance because they know they are going to make more money (interest) .

Get your bank to send you a table showing where you are at now and what your int/principle amounts are for the entire term of the loan .
Also ask them to do the same thing if you increased your payments by 380/mth

You WILL get a shock - trust me on this .......

is it possible to just send your current payment+$380 every month?

because as bret said, you pay off your interest first. so if you refinance, you have to repay off the new interest.

If pm me the loan amounts existing and new i have the tables to calc out what the diff would be .........

is it possible to just send your current payment+$380 every month?

because as bret said, you pay off your interest first. so if you refinance, you have to repay off the new interest.

yes absolutely. i can segregate any additional principal each month. right now i pay $25-$50 a month additional principal when i can. but i wouldn't be refinancing for the same loan term i'd be cutting the loan term in half from 30 years to 15 years. how could i not save interest by doing that?

If pm me the loan amounts existing and new i have the tables to calc out what the diff would be .........

i can do that but i'd have to guesstimate what the closing costs would be.

PM coming your way.

Assets = Liabilities + Stockholders Equity

That is all you need to know :)

actually that is interesting about refinancing and higher cost.

as expected if i kept my existing loan and paid $380 more a month additional principal it would take 17 years to pay off the loan which would shave 10 years off the loan but if a refinance at 5.5% for 15 years i can pay off in 2 less years and save $40,000 in interest then by just paying more principal a month.

did that come from your bank or the pm i sent you ?

the part about 17 years came from your PM. i used a loan calculator to verify and it came out to 17 years. then i used 15 years and 5.5% and it was 2 years less and saved about $40,000 in interest assuming the calculator is right. even though it might be more interest to just pay additional principal i probably will do that because if i can't afford $380 any given month I can just pay whatever I can.

ah - you still should ask your bank to recalculate your existing loan with the higher payments - that can't be done on a loan calculator. You may find you actually end up paying it off in LESS than 15 yrs .....

You will have to check a few things -

How much interest have you paid ?
Any charges to re-finance ?
Any charges to finance ?
Do you owe more than your house is worth NOW (very important)

You paid for 2.5 years already so thats pretty much like around 40% of the interest has been paid. so you have to do the math. in "usual" cases, you can probably save some money if u do re-finance now, assume that you're going to deal with the same bank and they're not charging you anything to re-finance(very unlikely)

And right now, you should know banks are really tight on cash, depends on the bank, they might want to get as much cash back as they want ASAP, or they are still going for long term profit.

If you dont want to do any re-financing for whatever reason. What you can do is, DOUBLE the amount of what you're paying right now. Say if you pay 2K a month. pay the same 2K + 2K Principle. Or whatever the max amount of Principle you can afford that month. That way you can pay your house off much faster and will probably pay almost the same amount of interest as re-financing, without the trouble of paperwork of course.

d0 it d0 it lolz

GR8, if it saves you a substantial amount of time, and you can afford it, refinance to a shorter term. 5 years into our 30-year, we streamlined to a 15-year, and by sending in a modest extra principal payment each month, took over 2 years off, for a grand total of 17 years, 10 months. It was retiring my mortgage that allowed me to buy my 8.

You can always make more money, but you won't be granted extra lifespan. Pay it off as early as possible.

the issue as it stands now is whether to keep the existing loan at 6.5% and just pay $380 additional principle every month or refinance at 5.5% for 15 years without paying any additional principal(although i would still be paying $380 more a month due to the shorter loan). as i stated in a previous post, if i do the former by my calculations i would pay off the loan in 17 years instead of 27 but it would cost about $40,000 in interest more than if i refinance. Brettus has contested those numbers so i will call countrywide and get a definitive answer.

If you can afford to do it, you absolutely should. No brainer, although not quite the biggest no brainer in the history of Earth.

shop around for lending fees; they're going DOWN. :)
I've seen banks doing refi's for $995 in origination.

shoot me the figures if you want Gr8, I know a thing or two about home loans and can crunch numbers for you.

Off the top of my head, I'd say your'e better off with the refinance.

If you can afford to do it, you absolutely should. No brainer, although not quite the biggest no brainer in the history of Earth.

On the surface it appears to be a no brainer, and yes i can afford it NOW, but what if i want to buy that new 2010 Camaro SS in 2 years? what if i just want that $380 in my pocket to burn on other shit every month like hookers and pron? i suppose in 2 years i will be making more money it's all relative i guess but still.

shop around for lending fees; they're going DOWN. :)
I've seen banks doing refi's for $995 in origination.

shoot me the figures if you want Gr8, I know a thing or two about home loans and can crunch numbers for you.

Off the top of my head, I'd say your'e better off with the refinance.

i'm not worried about the fees. i can just roll them into the new loan. the issue is how much more interest will i save by refinancing instead of just paying $380 more in principle a month. my numbers say $40,000 more. i'll PM you the numbers.

i will call countrywide and get a definitive answer.

Be cautious with Countrywide:

http://www.msnbc.msn.com/id/26648069/

The problem has expanded to many more states since that story was posted.