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Pondering Home Refi

August 24th, 2006 at 03:23 pm

When we bought this house it was on a 30 year loan. After paying for two years we refinanced it to a 20 year loan. Now we have been paying on the 20 year loan for two years and Im considering refinancing it to a 10 year loan. The payments would increase by $500 a month but the savings on the interest would be HUGE. Anyway...just pondering...

3 Responses to “Pondering Home Refi”

  1. ima saver Says:

    It is a great idea, you will save a ton of money in interest!

  2. Anonymous Says:

    If you refinance then you will be required to make that extra $500 a month. If something (emergency) happens, where you can't make your increased mtg payment, then you could get into a situation where the mortgage co. can tack on hefty charges. Most people don't know this, but mortgage cos. will send someone out to do a drive-by inspection on late-paid mortgages. That is where the inspector reports back to the mortgage co. the type of property, color, garage or not, no. of stories, whether property appears to be maintained, any furnishings, vehicles seen, etc. The mortage co. then charges the homeowner typically anywhere from $20-$50 for this expense.
    Unless you have the type of mortgage that forbids paying off early without a prepayment penalty, if I were you, I would leave the mtg as it is and just pay an extra $500 with your regular mtg. payment each month, making sure you tell the mtg. co. to apply it to your principal. You'll still save all that interest and won't be putting yourself into a potentiol bind.

  3. Saving in So Cal Says:

    Unless you're getting a much better interest rate or you are certain you can swing the extra $500 a month over the long term, then it may be better to do what Anonymous suggests and just pay the extra $500 a month to your current mortgage (assuming there is no prepayment penalty). That's what we're doing.

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