Costs of Refinancing
Today I sat down and calculated exactly how much we’re going to be saving by refinancing our mortgage. Here’s the stats:
Currently (starting balances)
First mortgage: 30 years at 6.375%; Principal and Interest $748.07
Second mortgage: 20 years at 6.89%; Principal and Interest $172.75
If we paid these for their whole terms with no extra monthly principal only payments we’d pay $168,332.51 in interest alone for both of these loans together. By consolidating, we’re going to now have:
One payment; 30 years at 5.59%; Principal and Interest $790.23. If we pay this for the complete 30 years with no principal only payments, we’ll pay $146,686.03 in interest. While this number makes me nauseated, it also makes me feel good to know that I’m saving $21,646.48. Sweet!
We’ll have to escrow our own taxes and insurance, but that won’t be a problem.
We are extending our mortgage two and twelve years respectively, but that’s okay. I am looking forward to the lower monthly payment so I can have that extra cash flow for other debt. I can always make principal only payments.
It feels good to have some positive news for a change!
Way to go! $21k is nothing to sneeze at — the refi is totally worth it!
Have you looked at the numbers for a 15 or 20-year mortgage? Or would you prefer to maintain the better cash flow month to month?
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Thanks for the useful info. It’s so interesting
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I want to cry when I read numbers like that, my mortgage is much much higher. Plus I have no hope of refinancing. But we’re not as bad off as some of our friends, one couple is paying $4000/mo currently on an interest only arm! I wonder if they’re going to be able to hold on, they think they can do it but I’m not convinced.
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Kacie- We could have picked our term and it would have been the same rate. We’d pay it off faster, but I prefer having the extra cash flow so that we can pay off debt and make the possibility of me being a SAHM a reality when the time comes! I am sure we will pay it off sooner than that, but I like knowing I only have to pay around $1000 a month.
JamesD- You’re welcome!
Miss M- I’m so sorry 🙁 I live in a pretty inexpensive area of the country. The relatively low cost of living was one of the reasons we moved out here. I don’t love living here, but it’s comfortable, and we can afford to have our own house here.
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