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!