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Should I refinance or pay off my home early?

We have a 15 year $400,000 @ 4.125 interest rate. Do you recommend to refinance to a 3.5% or even 3.25% as oppose to pay $300 extra in principals to pay off the loan early? We plan to stay for at least 15-20 years in the house. by harold_825_832 from Washington, District Of Columbia. Feb 23rd 2012 Reply


Kacey Ximines (Ximines)
#17 ranked lender in Maryland - 11 contributions

Based on the information you provided about being in the home for the next 15-20 yrs, I would advise that you go ahead and refinance. With the market the way it is, you can easily negotiate out of paying any fees. If you are really trying to pay off your mortgage early you can refinance into a lower and and still pay the extra $300 per month. Also, you could consider shortening the term of your loan.I hope this helps!

Feb 23rd 2012
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Rick Mcinturff (rmcinturff)
#50 ranked lender in Maryland - 25 contributions

ask your lender for the amortization of both scenarios to see which costs you less over that time frame- that should then be your choice if you can afford it

Feb 23rd 2012
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Drew Giventer (drew@accountablemortgages.com)
#112 ranked lender in Florida - 1 contribution

I think if you choose to do a refinance you should do the 10 year fixed at 3.0% paying 0 pointsMy direct number 866-879-0535

Feb 23rd 2012
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Scott Kinne (Skinne)
#29 ranked lender in Virginia - 72 contributions

Hi Harold,There are many additional items that need to be considered to help correctly determine what is the best approach to take in your situation. Some of those have to deal with your cash flow and other assets available. I always try to build in a little flexability for my clientelle. Its also good to understand when you actually plan on retiring, or if you are already? Yes, the 15 yr Fixed Rate today should be under 3.5% if you have reasonable credit scores and at least 20% equity in your home, which would save you some money on a monthly cash flow basis. But a major factor that we need to know is how long you have had your current 15 yr mortgage? If only a short time, then a refinance is more plausible. At 5-8 years it then because more questionable. Hope this helps. Call me if you need more info at 703-293-6146.

Feb 23rd 2012
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William J Acres (William_Acres)
#73 ranked lender in Arizona - 8,726 contributions

If your currently in a 15 year mortgage, then it does make sense to refinance at the lower rate. if youre being offered 3.25%, then your payment is about $200 lower than your paying now... That's all interest savings!!... It's absolutely worth it.. WilliamAcres.com

Feb 23rd 2012
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Joyce Ettingoff (speedlad)
#35 ranked lender in Maryland - 68 contributions

Enter your answer here On the surface it looks like you could reduce your payment by approx $125.00/month. That would be approx $22,500. over 15yrs. I would need more details to tell you how much this refinance would cost you if anything at all. Direct further questions to speedlad@aol.com.

Feb 23rd 2012
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Bert Carpenter (BertCarpenter)
#37 ranked lender in Arizona - 1,823 contributions

Although it may seem better to not pay for the cost of the refinance and to instead apply a little additional into the principal, that may not be the best option for you. You will want to consider a couple of different options. How much is the refinance going to cost me, and how many months is the break even. If I opt for keeping the payments the same, can I get a better rate for an even shorter term, such as 10 years. Is it wise for me to keep my payments this large? If you don't have sufficient savings or investments, a large payment could cause an issue if your cash flow dries up.In other words, the answer is not as simple as the question implies. Work with a local Mortgage Banker/Broker and have them show you the math for the different options. Only then can you decide which is best. Don't forget to check out your selected Mortgage Originator at the National Mortgage Licensing System at www.NMLSConsumerAccess.org ~ Bert Carpenter, The LoansA2z team of NOVA Home Loans ~ NMLS 40586 ~ www.LoansA2z.com

Feb 23rd 2012
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Deb Muelken (deb@debthemortgagelady.com)
#31 ranked lender in Minnesota - 5 contributions

The big piece of the puzzle that is missing is how long have you had your current mortgage? Although the new low rates are very exciting and no one wants to miss out...depending on how many years you have been paying, you might be at a point where more money is going to principle. Looking at what you would save in the new mortgage partf the equation, but, if you take what you have paidn interest so far, add that to the interest you will pay on the new loan, do you end out ahead of the game??? Maybe not. I just worked this example for a client of mine, for his 15 year mortgage, refinancing to 3.125% when everything was all said and done, would have cost him $1000 more over the life of the mortgage than if he stayed put in the current mortgage.If you are fixed on getting into a lower rate, be sure to reduce your term, if you have $300 a month to contribute now, you could probably afford thepayment at the reduced term. Hope this was some food for thought! Deb - the Mortgage Lady

Feb 23rd 2012
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Ralph Richard Guertin (ralph@absolutelowrates.com)
#136 ranked lender in Florida - 796 contributions

Youn should refinance down to 3.125% whichn is a rate you should be able to get and its pretty simple thats a 1% savings on 400k is approx 4k a year for the first few years and then as you amortize the loan it goes down. But in the first 3 years you should save approx 11k and you should be able to secure a loan @ 3.125% and have closing cost come in at 2% of less of loan amount so even at 8k which I see as worse case you would break even after 2 yrs..no brainer

Feb 23rd 2012
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