OK so I crunched some numbers......I estimated the mortgage at $131,000.00 even though we are at $131,850.00 right now, I figured that would be easiest to estimate.
Scenario #1
-Paying off the current mortgage without any additional payments.
-Monthly payment $940
-19 years left on 20 year mortgage at 4.8%
-Payoff date 08/2029
-$68,936.29 paid in interest from now till payoff
Scenario #2
-Paying off the current mortgage and paying $200 extra per month
-Monthly payment $940 + $200
-19 years on 20 year mortgage would be paid off in 15
-Payoff date 07/2024
-$48,840.12 paid in interest from now till payoff
Scenario #3
-Refinance to 15 year mortgage at 3.75%, no extra payments
-Monthly payment of $952 (only increases $12!)
-15 years
-Payoff date 09/2025
-$40,479.18 paid in interest from now till payoff
Scenario #4
-Refinance to 15 yr and pay $200 extra per month
-Monthly payment of $952 + $200
-15 years would be paid off in 12 years
-Payoff date 04/2022
-$31,085.88 paid in interest from now till payoff
So the winner is Scenario #4!! The payment will only go up $12 and we would save $28K in interest if we compare the regular payment scenarios and $17K if we compare the extra payment scenarios plus the benefit of automatically taking 4 years off. I am going to apply to our bank online tomorrow and also fish around and see if I can find a similar rate for less closing costs too. I am not interested in going out of the local area so hopefully I can find something good. But I do really like the bank we are using, they always apply my principle payments correctly, have good internet bank, great customer service, and the BEST free cookies in their lobby! But even if the costs were about $5K we are still saving so much it would be a wash on the closing costs.
Running the numbers for the refinance
July 15th, 2010 at 03:30 am
July 15th, 2010 at 04:23 am 1279164233
July 15th, 2010 at 11:31 am 1279189899
July 15th, 2010 at 01:24 pm 1279196676
July 15th, 2010 at 05:59 pm 1279213164
$5k borrowed at 3.75% (for costs) = $15/month, in addition. Won't change #3 or #4 substantially.
July 15th, 2010 at 07:20 pm 1279218029
July 15th, 2010 at 10:05 pm 1279227927
Obviously if you don't trust yourself to dedicate that $200 EVERY MONTH to the side account it doesn't work, but it gives you some flexibility/ cash on hand and still achieve the result you desire should you so choose.
Just something to think about.
July 16th, 2010 at 12:15 am 1279235744
Scenario #3
-$135,000.00 (Balance plus estimated closing costs)
-Refinance to 15 year mortgage at 3.75%, no extra payments
-Monthly payment of $952 (only increases $12!)
-15 years
-Payoff date 08/2025
-$40,479.18 paid in interest from now till payoff
Scenario #4
-$135,000.00 (Balance plus estimated closing costs)
-Refinance to 15 yr and pay $200 extra per month
-Monthly payment of $952 + $200
-15 years would be paid off in 12 years
-Payoff date 05/2022
-$32,256.56 paid in interest from now till payoff
July 16th, 2010 at 12:17 am 1279235865