Profile picture for characato

Refinance Pros and Cons

I have a 30 year 5.25% fix mortgage on my current loan (original loan amount was 259,000) and done with 9 years, 21 to go. I was planning to refinance the balance (currently at 218,500) at 3.25 fixed 15 year loan with 1% origination fee. no points. Any suggestions if I should do it or not?
  • January 14 2012 - Longmont
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Answers (5)

Con is your payment goes up about $131/month.
Pro is you pay the loan off 6 years earlier and save about $80,000.
I agree with the others to contact Nic and get a 2nd opinion.
  • January 14 2012
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If your plans are to be in property permanently, and not likely to incur loss/lower income during the 15 yr term then it would make sense. However I would not pay an origination fee as payback is 80 months.
  • January 14 2012
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It will save you money. If saving money is "worth" anything then it is worth it. If you despise hassles, it may not feel worth it during the process. You need to find a Mortgage Pro you trust, and examine all the options, in detail. Then decide if you really need to be hurrying up to pay for a house in this market climate. To me the only reason to go from a thirty, down to a fifteen year loan, when you could do a twenty, is if this is the last house you ever want to buy. There are also multiple layers of possible reasons you can't do it, now. These can't be fully examined in a free internet advice forum.

I'd call Nic Netherton if I were you.
  • January 14 2012
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3.25% with 1% origination is too high. You should easily get 3.25% with no origination fee. Contact Nic Netherton in Colorado and ask for a quote. Use the professionals tab above to search for his contact info.
  • January 14 2012
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Profile picture for sunnyview
This refi breakeven calculator here might help you figure out whether it is worth it or not. You can plug all the numbers in an see what you think.

It depends on when you plan to retire, but you would get your origination fee back in about 6 months and shortens your loan term by a whole 6 years.

You might also consider refinancing into a 30 year fixed and applying the $500 you would save to principal here. That would give you about a 16 year mortgage, but you would have the flexibility to prepay or not. Just make sure you can comfortably make the new payment no matter what.
  • January 14 2012
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