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mortgage question

16 years ago

my mortgage company will do a no-cost refinance on my home loan. yes, you pay a bit more interest but in the end, your interest still does drop. i pay 6.3% now on a 30yr loan. they will redo it too 4.75% for a 15yr loan. i have 22 yrs left now. my payment goes up $78/month but the term is 7yrs less. i could do a 20yr loan for 5.25%. payment will drop $22/month. i say go for lowest interest rate. won't be in house in 15yrs anyway.

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Comments (5)

3katz4me
16 years ago
I've refinanced a few times in my life to go from a 30 year to a 15 year - scenarios much like you describe. That along with the fact I didn't take equity out at the time I refinanced leaves me with my primary residence paid for and a second home that will be paid for before I am retirement age. Based on my experience I'd highly recommend going for the shortest term and lowest rate. Even if you do move you'll have more equity than you would if you went for a longer term/higher rate/lower payment.
joe_mn
Original Author
16 years ago
i could get 4.25% but it will cost me about 3% of loan amount for fees. plus all the paperwork. this new loan is paperless according to wells-fargo. i was somewhat surprised when i called the bank and they asked if i wanted to lower my interest rate for basically no money and no paperwork.
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dave_donhoff
16 years ago
Joe,
Your heading says you have a question, but your post has no question.

You don't appear to be seeking advice or guidance... if anything, you seem to just be looking for affirmation.

Is that right?

Dave Donhoff
Leverage Planner
alphacat
16 years ago
You say "Yes, you pay a bit more in interest but in the end, your interest still does drop." That's not true. If your interest rate goes down, you pay less in interest, period.

If the term of the loan decreases, you may well pay more, but that additional payment is principal, not interest. And whatever you pay in principal goes toward reducing your future interest payments.
christine
16 years ago
Dave - I had the same question - where is the question? :)

Alpha - I think what he is saying is that the interest on a 'no cost' refi is higher than if you did a traditional closing and had closing costs, but even with the no cost the rate is lower than what he is paying now. That is how I read the post.

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