Can I get a second set of eyes on this, or more haha. I'm pretty proud of myself for thinking this through. Hopefully i am right.
I want to refi to remove PMI. With a new FHA, you have to refi to remove it.
Looking to stay in home at least 10 more years. Only way I see that changing is if I lost my mind and got remarried to someone with kids and we needed more rooms. :)
Refi will cost me about $10k if I need to put any into it. With the FHA, I only had 3.5%. It needs 95% LTV. It's only been a year so it may appraise but not sure. If I don't need to put money into, then woohoo it's only closing costs.
Numbers below are only the refi situation, no other savings etc included.
Option 1: Refi.
- I will save $200 per month.
- The earn back period on my $10k, at $200 per month is 4y2m.
- investing my $200 per month at a conservative 5% return would come to approx $11,100 in 4 yrs.
- in 10 years that $200 per month is at $31k.
Option 2: no refi
- I continued to waste $200 per month on PMI
- I put 10k into investments "today."
- I don't factor any other contributions bc this is an isolated calculation.
- in 4 years, it grows to $12k
- after 4 years, I still don't have that extra $200 to contribute bc I still have PMI. So my original 10k keeps growing.
- in 10 years, I have $16,300
So Refi clearly wins, right?? In 4 years, I come out a little better with not refinancing but definitely not after that.