We are changing our mortgage from 30 yr/fix to 15 yr/fix. Is it wise to pay more money to lower the rate. If we are going to stay in this house for 5 more years, is it wise to refinance? How do we lower the fees for refinancing, we have questioned numerous loan companies, they all come pretty much the same price.
Yes, it is wise to pay more up front to lower the interest rate. Over the life of the loan, the compounding on the interest will equal many times the amount you pay up front for the lower rate.
Be sure to refinance for the balance only. Check all your options. If you’re score is excellent it may be better to do a “pick-a-pay” or pay option loan. You qualify at the 30 year rate but each month you have the option of paying 30-yr payment, 15-yr payment, minimum payment or interest only payment. The rate is lower than a regular fixed rate mortgage. Therefore, if you were having to make home or car repairs you can pay the minimum payment and still be on time for you monthly payment. You can also keep current mortgage and pay an extra payment once a year and it will cut the mortgage time in half.
Yes it is a smart go. You will be paying off your loan quicker and paying less interest.Hopefully you will be able to pay off your home in a decent amount of time and then either sell it, or place more equity into it.Good luck!
Keep in mind that it costs a fantastic deal of money to refinance. And if you can’t recoup what you pay out to refinance in that 5 years, then it may not be worth it. You really need to take a look at your whole financial depiction. Refinancing could impression other area’s costing you money that you thought you would save. If you can’t save $150 + per month on a refinance, then it isn’t worth it. You force want to check with your accountant about any implications to the rest of your finanical well being.