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Learning, Sharing, and Teaching => Ask a Mustachian => Topic started by: jamesbond007 on March 04, 2020, 12:42:57 PM

Title: Another refi question. Does it make sense in my case?
Post by: jamesbond007 on March 04, 2020, 12:42:57 PM
Original loan: $351,300
Rate: 3.625% @ 30 year fixed
1st Payment: 9/1/2016
Monthly: $1602
Maturity: 5/1/2046 (I made some payments towards principal and no longer do it now).


Refi: $324473 (Not including payoff costs)
Rate: 3.375% @ 25 year fixed
New Monthly: $1603
No cost, no points.


No difference in monthly payment but I will be saving about $24,000 over the lifetime of the loan compared to my original loan. Does it make sense? I don't plan to hold on to the loan longer than 15 years but I'd like to have the option of having a low monthly payment and hence the 30 year fixed.


Currently setting aside $1000 in VTSAX (total stash as of today about $50,000) earmarked to pay off this mortgage. When the balance in this VTSAX account meets the balance of the mortgage, I will sell all and pay it off.


Does this refi make sense?
Title: Re: Another refi question. Does it make sense in my case?
Post by: six-car-habit on March 05, 2020, 12:12:30 AM
Seems like you'd be dropping/ not having to make - 14 month of payments @ $1603 if you went with the new loan = $22,400 saved, if you went full term on paydown   Since there is essentially no cost / points / appraisal / involved, its just your time and paperwork to make this happen.

 If you pay it off early, versus 25 years, the "savings" will be significantly different than $22K . But that doessn't seem like a reason not to pay it off early if  possible.
  Well, probably you'll save more overall in interest payments than $22K if you can pay it off in 15 years.  But they are 2 different equations... 26.2years vs 25 yrs cost comparison, and 15yrs vs 25 yrs.....sort of an apples to oranges comparison.
Title: Re: Another refi question. Does it make sense in my case?
Post by: Alternatepriorities on March 05, 2020, 12:43:41 AM
My math says you’d be putting and extra $68 a month into principle instead of paying it in interest. If there is no up front cost that seems like a very solid win. If there are any costs like appraisal fees you could just divide it by $68 to figure out how many months it takes to break even.
Title: Re: Another refi question. Does it make sense in my case?
Post by: jamesbond007 on March 06, 2020, 10:10:53 AM
Great. Thank you. I confirmed that there are no upfront costs whatsoever. I will go ahead and take this deal.
Title: Re: Another refi question. Does it make sense in my case?
Post by: Alternatepriorities on March 06, 2020, 02:16:34 PM
Quote from: jamesbond007 on March 06, 2020, 10:10:53 AM
Great. Thank you. I confirmed that there are no upfront costs whatsoever. I will go ahead and take this deal.

With all the new threads on here about refinancing I just sent me broker a request to let me know when it makes sense to do it again since we just finished in Feb. Really thought I'd timed the low before the Virus stirred everything up.