Should we refinance our house?

Trang
We are looking at refinancing out mortage from a 30 yr to a 12 or 15 yr loan. My question is they want to charge about $14, 000 to refinance here in FL and our mortgage would go up $600 more a month. If we just sent in $600 more a month without refinancing would it be the same as refinancing or would we actually have to refi in order to save as if we did have a 15 year loan? Sorry if it's confusing.

Aimee
I would definitely look into if sending $600 more per month would knock 15 yrs. off your mortgage rather than refinancing for that fee.

Crissy
Interest rates are at or near 5.0%. If you are much higher than that it makes sense to refinance. $14K in closing costs is outrageous and that mortgage broker should be castrated. Average closing costs should run about $1, 500. The 15 year and 30 year rates are about the same, so I would say stick with a 30 year and pay an extra amount to pay off in 15 years. A good mortgage professional will run you an amortization schedule to show you how much extra to pay.

Akilah
Funny you should say that. I was looking to do the same last year. But my house is not worth what I bought it for a few years ago. So I found out what the fees and costs were to do a refinance. I divided that by 12 and I started sending that in to my Mortgage Company as an extra payment. I recently did the Amoritization on my Morgage and I am now paid ahead by 12 years.So if I stopped paying that extra amount today then I would only owe 18 more years on my Mortgage. By doing that I cut off 12 years of payments and interest. That saved me more than any Refinance.It just makes more sence. If you have an interest rate below 6% it is not worth it to refinance. Just send in the extra money.

Basil
ask your friendly neighborhood bank that you trust.interest is going to an all time low - have to watch out for added on charges which can tank you. as we know financial institutions can be shady - so first clear it at your friendly neighborhood bank that you trust - get a couple of opinions.a short term load (IMO) is always the best way to go - however if interest is dirt cheap then it may not be as important to get a longer term loan - but then i am not in the loan business - cannot be sure.

Milissa
Yes, you must spend and endebt yourself for your country.Ask not what you country cand spend for you but what you can spend for your country.Together we can spend and indebt ourselves out of this financial crisis.

Lacy
$14, 000? That doesn't sound reasonable at all. What amount are you looking to refinance?

Elisabeth
To decide if it would benefit you to simply keep your existing mortgage and pay extra or refinance you must first find out if you have a simple interest loan or a schedule interest loan. A typical conventional mortgage loan is a scheduled interest loan, which is the worst of the two.Schedule interest is where payments are credited to interest and principal on the due date, whether you pay it a little early or little late. Most lenders use schedule interest method. Your amortization schedule is already fixed since the first day you sign the loan contract.Simple interest is where the interest portion of the payment depends on the actual number of days that have past since the last payment. If you pay it early, more of your payment is applied toward the principal. If its late, more goes toward interest. If its on time, there is no difference between schedule interest and simple interest. However, if you were offered a bi-weekly payment (meaning your monthly payment is split in half and you pay this amount every 14 days), the savings on a simple interest method is huge!Take a look at this example:$100, 000 loan with a 10% interest.Monthly payment is $877.57With schedule interest calculation (which is used in mortgages), this is how the loan work:Month 1: $100k x 10% = $10, 000 interest$10k divided by 12 months = $833.33 is 1st month interest$877.57 - $833.33 = $44.24 goes toward the principalMonth 2: $99, 955.76 x 10% = $9, 995.576$9995.576 / 12 = $832.96 is 2nd month interest$877.57 - $832.96 = $44.61 goes toward the principalAs you can see, it takes a very long time to build equity in your home.With a simple interest loan (which is used in all refinance loans from Primerica Financial Services) if you pay every 14 days, this is how the loan work:Month 1 (day 1 - 14): $100k x 10% = $10, 000 interest$877.57 divided by 2 = $438.79 bi-weekly payment$10k divided by 365 days = $27.40$27.40 x 14 days = $383.60 (first 14 day interest)$438.79 - $383.60 = $55.19 is applied toward principalMonth 1 (day 15-28): $99, 944.81 x 10% = $9994.481$9994.481 / 365 = $27.38$27.38 x 14 = $383.32 (second 14 day interest)$438.79 - $383.32 = $55.47 is applied toward principalMonth 1 summary: Your total payment from day 1-28 is $877.58. $766.92 is interest payment and $110.66 is applied toward principal.Month 1 - 2 (day 29 - 42): $99889.34 x 10% = $9988.934$9988.934 / 365 = $27.37$27.37 x 14 = $383.18 (third 14 day interest)$438.79 - $383.18 = $55.61 is applied toward principalMonth 2 (day 43-56): $99, 833.73 x 10% = $9983.373$9983.373 / 365 = $27.35$27.35 x 14 = $382.90 (forth 14 day interest)$438.79 - $382.90 = $55.89 is applied toward principalMonth 2 summary: $766.08 is interest payment and $111.50 is applied toward principal.Eventually, the bi-weekly payment plan with simple interest will pay this 30 year loan off sooner by a few years than a traditional mortgage that uses schedule interest.Three questions you should ask yourself when you considering to refinance;1) What is your total cost?2) When will you be out of debt?3) What is your interest rate?Hope that helps