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Looking at refinancing?
12/24/2008

I ran the numbers and the numbers didn’t work right.

I figured with the interest rates falling, I would look at refinancing. It hit that magic 2 point difference in the interest rate. A drop from what I am paying now to the current advertised rate. It looked like I could drop the payment two hundred dollars a month. I know that sounds very good, espically with the current economic mess. It sure is tempting, a lower monthly payment and a lower interest rate.

What I thought would be a savings would cost me a whole lot more money.

I am sure glad I found a “should I refinance” calculator. If I dropped the payment, I would have to extend the loan to a new term: 25 or 30 years. Once I calculated the expenses and the new rate plus the new term, it turns out I would be spending an additional 35K to pay off the house.

Refinancing seems awfully short sighted once I ran the numbers. I don’t think I will be moving anytime soon. I don’t think my job is at risk right now. I don’t want to be paying a mortgage past my retirement age. My current mortgage seems much better now. I sent an email off to the refinance place: No Thanks.

I wonder how many people will be looking at the doing this? The bank was more than happy to offer me an opportunity to get myself further into debt to them. They were more than willing to let me extend my payments out another 25 or 30 years… I wonder if this will be the next financial mess facing homeowners down the road.

Replies: 1 Comment

Good for you to run the numbers!! A lot of people are probably jumping on the re-fi bandwagon, not realizing how much extra money they'll pay out in the long run. (For some homeowners, it may make the difference between holding on to their house and foreclosure - or eating and not eating. But if it can be avoided...it should be avoided.)

See if your mortgage company will allow you to do bi-weekly or twice-monthly payments. It splits your mortgage payment up, and it can shave up to 7 years off your mortgage. This, as much as making small regular payments against the principle, is a small way to save yourself money and headaches.

I deeply feel for the folks whose situations are oh so bad that they have to go further into long-term debt to hang on to their house today.

Couldn't you shop around to other banks and see if you can get the lower interest rate, lower your monthly payments even $50 or $100, and not have to buy into a 25 or 30 year mortgage? Banks are being competitive right now - even if they want long term business to bolster their prospects next decade, some of them may have an option that lets you lower your monthly, and doesn't put you at a 25 or 30 year mortgage.

Good luck!!!

Laughing Muse said @ 12/24/2008 10:08 AM CST


	back \| up \| next Looking at refinancing? 12/24/2008 I ran the numbers and the numbers didn’t work right. I figured with the interest rates falling, I would look at refinancing. It hit that magic 2 point difference in the interest rate. A drop from what I am paying now to the current advertised rate. It looked like I could drop the payment two hundred dollars a month. I know that sounds very good, espically with the current economic mess. It sure is tempting, a lower monthly payment and a lower interest rate. What I thought would be a savings would cost me a whole lot more money. I am sure glad I found a “should I refinance” calculator. If I dropped the payment, I would have to extend the loan to a new term: 25 or 30 years. Once I calculated the expenses and the new rate plus the new term, it turns out I would be spending an additional 35K to pay off the house. Refinancing seems awfully short sighted once I ran the numbers. I don’t think I will be moving anytime soon. I don’t think my job is at risk right now. I don’t want to be paying a mortgage past my retirement age. My current mortgage seems much better now. I sent an email off to the refinance place: No Thanks. I wonder how many people will be looking at the doing this? The bank was more than happy to offer me an opportunity to get myself further into debt to them. They were more than willing to let me extend my payments out another 25 or 30 years… I wonder if this will be the next financial mess facing homeowners down the road. Replies: 1 Comment Good for you to run the numbers!! A lot of people are probably jumping on the re-fi bandwagon, not realizing how much extra money they'll pay out in the long run. (For some homeowners, it may make the difference between holding on to their house and foreclosure - or eating and not eating. But if it can be avoided...it should be avoided.) See if your mortgage company will allow you to do bi-weekly or twice-monthly payments. It splits your mortgage payment up, and it can shave up to 7 years off your mortgage. This, as much as making small regular payments against the principle, is a small way to save yourself money and headaches. I deeply feel for the folks whose situations are oh so bad that they have to go further into long-term debt to hang on to their house today. Couldn't you shop around to other banks and see if you can get the lower interest rate, lower your monthly payments even $50 or $100, and not have to buy into a 25 or 30 year mortgage? Banks are being competitive right now - even if they want long term business to bolster their prospects next decade, some of them may have an option that lets you lower your monthly, and doesn't put you at a 25 or 30 year mortgage. Good luck!!! Laughing Muse said @ 12/24/2008 10:08 AM CST