Costs of Refinancing

Posted by Mrs Money on September 17th, 2010

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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! 

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5 Responses to “Costs of Refinancing”


  1. Kacie says:

    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?

    [Reply]

  2. JamesD says:

    Thanks for the useful info. It’s so interesting

    [Reply]

  3. Miss M says:

    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.

    [Reply]

  4. Mrs Money says:

    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.

    [Reply]


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