Any mortgage specialists here??

**Dan B.** · 01-20-2013, 10:26 AM

I'm looking at the rates offered on my credit unions website...it's Pentagon Federal CU.

I'm currently at 3.75% w/ a remaining balance of $89,000 and 13yrs. They are offering 2.75% over 12yrs. From what I'm calculating this will take my payment up $26 a month but cut a year off my remaining payment schedule. With closing costs included (not sure what they would total but seeing they charge a 1% loan origination fee) I'm not sure that I would be any further ahead doing the re-fi than I am right now.

The remaining total repayment of my current loan is $109,290.48. The total repayment after re-fi would be $104,591.52. This equates to $4,698.96 saved (or $32.63 per month over 12yrs). But taking the closing costs into consideration, I may not save anything.

That 2.75% sure does look inviting!! But I just don't see it in the numbers.

Any thoughts??

**Terminated** · 01-20-2013, 10:50 AM

It seems to me like you answered your own questions... The numbers look good on paper, but keep in mind the closing costs you will need to pay again.

In all honesty, I would just look at paying the additional $32 per month to knock another year or so off the current mortgage, save the interest and the closing costs. The only way I see a re-fi being plausible is if you're looking at a) a longer term remaining on the mortgage (15-20 yrs?) or the interest rate is noticeable enough (4.75% to 2.75%). Other than that it would be a moot point for me.

**CollinsPC** · 01-20-2013, 11:01 AM

I would save the costs and just add 30 a month to your current payment. This will save you about the same amount.

**Dan B.** · 01-20-2013, 11:10 AM

I'm already adding that to the payment to make the total an even about. So I'm ahead as it is I guess.

**PaxtonShelby** · 01-20-2013, 03:34 PM

I agree that you should keep paying one extra payment per year and you will knock a year or more off your payments.

**94Cobra** · 01-20-2013, 08:12 PM

If you have enough equity in your house, you should consider replacing your mortgage with a Home Equity Loan. There are very low closing costs on the HE lines and you can usually eliminate the escrow real estate tax BS. I have a HELOC through Citizens at 2.74% and it costs me $20 per year.

**Dan B.** · 01-20-2013, 09:02 PM

I have about 50% equity in my place. I think PFCU is close to 1.99% That's a good idea...may have to explore that.

**gpfarrell** · 01-27-2013, 06:13 PM

Is your rate fixed now? Most HELOCs are variable rate. If your in a position to pay it off and just want to use somebody else's cheap money, that's fine. But if/when rates climb your Home Eq might have a much higher rate than you have now.

**Dan B.** · 01-27-2013, 07:56 PM

I'm am fixed at 3.75%.

**gpfarrell** · 01-27-2013, 09:19 PM

Here's the deal. I = PxRxT. I is interest; what you pay the bank to use their $. It's based on the Principal (P) which is pretty modest here as far as mortgages go. The current Rate (R) is pretty low too; making it lower won't change "I" that much. Finally, T isn't 30 years... You're just over a third of that. Your current "I" is already low because all 3 components are comparitevely low. I'd be inclined to leave it alone.