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#383619 - 10/03/12 07:48 PM Re: Time to refinance? [Re: pmbuko]
Ray3 Offline
connoisseur

Registered: 02/02/04
Posts: 2840
Loc: Rochester, NY
The question you need to answer is a simple one with a no-brainer answer - What direction are interest rates going to go in the next 10-20 years?

BTW, the answer to the above question should also point you completely away from an adjustable rate mortgage.

At current lowest ever rates, you can win three ways. First, get the lower rate and pay less interest over time.

Second, you REALLY need to think about looking at a 15 year mortgage. The payments will be a bit higher, but the contribution to principal is MUCH higher and much faster. Upon a sale, the accelerated equity accrual can yield a very nice result for available funds to purchase the next house.

Third and best. The amount you end up paying on a 15 year mortgage is incredibly less than on a 30 year mortgage.

Get yourself an amortization calculator and play with the permutations. Once you see the difference between a 15 year and 30 year mortgage, you will be stunned.

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#383627 - 10/03/12 08:22 PM Re: Time to refinance? [Re: Ray3]
dakkon Offline
connoisseur

Registered: 02/08/04
Posts: 1844
Nick, it will take you several years to make up for your closing costs as well as the other associated costs... This needs to be accounted for in your cost/benefit analysis...


The interest differential is just over a percent or so... depending on Credit..

It also depends on how much if any you pay over your required mortgage payment.. The larger the payment you pay the less it will be worth it for you... I have a buddy who bought a 200,000$ house at 6% interest. he has no desire to re-finance, it's not worth it for him.. He and his wife pay twice the scheduled payment, which means they will not be paying that much interest anyhow....


So, are you making the minimum payment; or are you guys making extra payments? If you are making an extra payment, how much extra?


As far as a 15 year loan like the others have stated. I would personally NOT recommend this.. I would recommend a 30 year fixed mortgage, while making payments that would correlate to a 15 year mortgage. This way if there are any future financial troubles, one can reduce the payment by 1/2 and not "get in trouble with the mortgage company". However, if you get a 15 year mortgage you're locked into a larger payment....



Bottom line..... Nick, if you pay extra then it will be less worth it for you to re-finance. The larger the extra payment becomes, the less benefit you will realize.

Also, keep in mind, if you make 1 extra payment a year on your mortgage that will have a very significan impact on the over all interest paid... So, you are able to make just 1 extra payment a year you very well may be at the same point that you would after having refinanced...

Also, giving the mortgage companies even more cash (closing costs), if you were to put the re-finance fees as well as appraisal costs into your current principal you may be ahead over all... A lot of mortgage brokers want to get people to re-finance... That's a pretty good source of revenue for them~~


So, i think it would not be worth it for you.. There are to many other ways for you to get ahead given your situation, and having only closed 1 year ago.

I hope this helps Nick...

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#383637 - 10/03/12 11:03 PM Re: Time to refinance? [Re: nickbuol]
CatBrat Offline
axiomite

Registered: 08/05/09
Posts: 5801
Loc: Some random location
I had often thought should I pay extra on my 30 year mortgage, or should I put that extra to work in a retirement fund? Given the current state of the economy and my age, I always opted for the retirement fund.

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#383653 - 10/04/12 08:16 AM Re: Time to refinance? [Re: nickbuol]
dakkon Offline
connoisseur

Registered: 02/08/04
Posts: 1844
it all depends on interest rates... if the rate on your mortgage is higher than what your making in the market then the house is a better place to put your cash... right now it is an especially hard time to decide between the two.. returns and rates are about eequal right now... personally if it was close i would always default to the mortgage... the logic behind this is that everyone NEEDs shelter....


with that wing said, cat... me and you invest in similar ways... my retirement account is + 5.3% right now... my " trading account" is up about 300% right now, just have to sell apple before it tanks, should that happen....

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#383654 - 10/04/12 08:37 AM Re: Time to refinance? [Re: nickbuol]
CatBrat Offline
axiomite

Registered: 08/05/09
Posts: 5801
Loc: Some random location
I just wish I had more time to study the various stocks. I plan on making it my full time job whenever I end up losing my job. I just hope that's later than sooner.

The small company I work for has been on a downward spiral the past few years.

On the housing issue, I look at it this way. If I short my retirement fund and invest in the house and I lose employment when the house is 3/4 paid for. I could lose the house to foreclosure. With retirement funds and the skill to make it grow in retirement, I at least have a fighting chance.


Edited by CatBrat (10/04/12 08:45 AM)

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#383656 - 10/04/12 10:06 AM Re: Time to refinance? [Re: nickbuol]
CatBrat Offline
axiomite

Registered: 08/05/09
Posts: 5801
Loc: Some random location
Just checked my 401k. It's setting at 6.66% for the year. Whoopie! Not!

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