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Abbey
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 Caron
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lisascherzer
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livinginnky
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livinginnky
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livinginnky
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Abbey
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livinginnky
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Posted: Fri Jan 25, 2008 1:27 pm Post subject:
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| Quote: | | I do know what a prepayment penalty is but I didn't know how it was calculated. My PP concern was about the new loan, not the one we have now because we want to pay it off within 15 years. I thought the 30 would give us more flexibilty in our payment ie adding extra principal as often as possible while still having our mandatory payment lower. |
I understand your concern. A prepayment penalty as far as I have seen is only for the first 3 years or less. After that there is no penalty. There may be longer but I am not familiar with them. So you shouldn't have one for the current loan any longer. And as far as the new loan goes (if you decide to get one) won't matter as long as you stay for over 3 years. You said you will so a prepayment penalty won't be relevant to you. A prepayment penalty isn't always bad, IF it saves you money. In your situation it doesn't sound like you will have to worry about having one either way.
Now on to the fun stuff.
You owe $74,000 on a home worth $150k.
Your original loan was for $84,000 and you have 20 years remaining at a payment of $825. So you have $631.06 is your principle and interest and right now $194 mo for taxes and homeowners. That should be correct let me know if it is not. What that all means is that you have
8.25% / 30 year fixed
20 years remain
Original $86,000
owes $74,000
payment $825 piti
pi $631.06
pay extra $85 per month to pay off in 15 years
for a total of $716 month X 179 months = $128,164
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New loan- no cash or other debts paid
74,000 for 30 years at 6% is $443.67 PER MONTH
or 15 year payoff with an additional $185 per month
total of $628.67 month X 179 months = $112,531
You would save $15,633 by refinancing your current mortgage.
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Now lets take a look with cash to you -
$85,000 loan amount for 30 years at 6.5% is $537.26
or 15 year payoff with additional $205 per month is
a total of $742.26 month X 180 months = $133,606
So it would actually cost $21,000 more to pay off the 2 debts.
So you will need to consider the total cost of those debts
and see if they will cost you more or less than $21,000.
To summarize it appears to be beneficial to refinance. Whether or not you get the $5000 cash and pay off the other debts is up to you and would cost you an additional $21,000 over the next 15 years. Either way you are going to save money over what you currently pay. Everything in my figures are just estimates and of course not based off of any facts just what you have provided me and the rates are simply for example purposes. If you got a lower rate the benefits would obviously increase and the opposite if you got higher rates. Keep in mind that you will most likely have to pay a higher rate if you decide to get cash and pay off other debts. This is called a "cash out" refinance. The other option is to simply refinance you current first mortgage, this is called a "rate and term" refinance.
I know this is a lot of info, so simply let me know if you have any questions.
_________________
Eric Matthews
Mortgage Refinance and Home Loan Guide |
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livinginnky
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Posted: Fri Jan 25, 2008 1:33 pm Post subject:
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| Quote: | | Can I expect a good rate and service with the current scores or should I wait for higher scores and lower interest rate this summer? Thanks for your feedback. |
I didn't really catch this comment at first. You should (and this goes for everyone, not just the original poster) always expect a good rate and especially good service no matter what your credit score, situation, income, race, color, gender, etc, etc, etc...
As far as rates go even low credit borrowers are getting rates lower than they were 20 years ago for the best credit borrowers.
I just wanted to point that out. And as far as your scores go they are fine and I don't see the rates getting any better. What matters just as much as your scores is the credit report itself. You can have a high score with poor credit and vice versa, you can have a low score with (seemingly) good credit.
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Eric Matthews
Mortgage Refinance and Home Loan Guide |
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Abbey
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livinginnky
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Abbey
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livinginnky
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Abbey
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lisascherzer
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