Should I refi?

[AlanStache]

Am currently in a condo with mortgage at a rate of 5.875%, bought four years ago at 160k, 20% down, financed 130k.  Currently own ~110k.  Base payment is 780$, taxes come to 127$ per month.  For the last approximately three years I have been paying down principle with an extra 290$ per month, for a total monthly payment of 1200$.  This puts my payed off date at around 12 years, 3 months from now.

I got the below quotes for a refi into a 15 year loan on the remaining 110k.
a) 3.715% APR, monthly payment of 793$, 1400$ cash out of pocket at closing
b) 3.966% APR, monthly payment of 806$, 940$ cash out of pocket at closing
c) 4.216% APR, monthly payment of 820$, -150$ cash out of pocket at closing

Given a 1200$/month payment (and same taxes) this gives pay off dates of (in years from now):
a) 10y, 3m
b) 10y, 5m
c) 10y, 7m

Complicating factor is that I dont know how much longer I will be in the condo.  I will likely move in with my girlfriend in less than 6 months.  And my mom recently moved in with me from across the country after a job loss, she likes the condo well enough but would really like a garage.  Homes with garages can be bought in the 160's around here.  I have been thinking that I would keep the condo long enough for her to get settled at bit then look into buying a house for her, and presumably I would be living with gf sometime around then.

I really have no interest in renting the conto to a 3rd party, condo board might not like this anyway, but could probably get over 1200$/mon.  And if I were to buy elsewhere I would want to use the equity as part of a down payment.  Am maxing out the 401k and Roth IRA + saving in taxable accounts.  I have not refi-ed earlier because I thought I would have moved by now and the differences never seemed worth it before.

Condo dues are 150$/mon.  I could with no effort up my monthly payments to 1500$.  Condo is probably worth ~150k today-really am not sure, have seen numbers all over the place.

I guess the basic question is, is paying 1400$ to refinance worth it for the off chance I will keep the condo for more than a few years?  I really hate paying 5.875% when I could get much lower.  Also I am afraid that I am way over analyzing all this.  Any and all thoughts are welcome.  -Thanks.

[matchewed]

If you're uncertain about the future of staying in the condo and will be moving in with your GF to another home in the future why not use a 5 or 7 yr ARM? Stop paying extra into the mortgage since you plan on offloading the place. See what Refi's you can get with that. This gives you a workable time frame for your mother to save up (since you'll be paying less into your mortgage), you'll have equity for when it's time to sell.

[AlanStache]

Yeah an ARM had crossed my mind, lower rate = good and worst of worst cases I could probably pay it off with a check in 5-7 years if it were to reset to something stupid. 

But you still think adding ~1400$ in costs is worth it today? 

Current vs 15year
12year - 10year = 2year, 2year * 1000$/mon = 20,000$ in 2025 dollars.
vs.
1400$ in 2013 dollars...

Or with an ARM
With minimum payments on each
1 year out: 3.5%ARM, 1400$ + 110k ->107k, w/ 200$/mon less in payments: 2400$
1 year out: 5.875%, 0$ + 110k -> 108k

So in round numbers if I kept it one year with an ARM we have -1.5k + 3k + 2.5k: 4k
Or do nothing and stat where I am: 2k

So even keeping it one year I am way ahead of the game.

-Thanks much, just needed some one to focus my mind on the right math.

[matchewed]

Why not just run a few of the scenarios through a calculator and see which saves you more money for your time frame?

[seattlecyclone]

If you're unsure about how long you'll keep the condo, I would think twice before doing a re-finance that requires you to pay anything at closing. It will take you some time to recoup that money in saved interest costs. Figure out how long that period is for the loan offer you're given, and make a guess at how likely it is you'll still own the place at that time.

That 4.2% loan with negative closing costs looks pretty tempting. You have no reason to keep your current loan since this offer has a lower interest rate and they're paying you to refinance. The other offers may be better if and only if you're reasonably confident that you'll be there long enough to make the closing costs back on interest.

[AlanStache]

Yeah the 4.2% is better than where I am at now but the 1400$ in costs is effectively added to the principle I have to repay, right?  If I were to fully pay off the loan off right after doing the refi would I have to pay 111,400?  Or are they "giving" me that 1400$ and the cost of that gift is an extra 0.5% on the rate with the same principle?

Will need to really look at numbers for this and an ARM based on some good calculators.  See where I would be in 1 and 5 years from now.  If I read it correctly the ARM quote from zillow I just got is capped at 5% and that is still better than were I am now.

[seattlecyclone]

Banks will often offer to let you pay "points" up front in exchange for a lower interest rate, with no effect on the principal. The points can even be negative to give you a rebate on the closing costs. I presumed from your initial post that was the situation here, but you would probably have to read over the fine print to be sure.