One Mortage Refinance, Coming up!
I’ve passed up many mortgage refinance offers that have come in the mail. Most of them tried to hook me by offering huge equity loans or crazy low payments. Those ones went into the recycle bin without a second glance. Some of the really ridiculous ones had obviously not done their homework, or were preying on stupid people – because not only were they offering $$CASH$$ but when I looked at the rates, they were actually higher than what I was already paying. Pshaw! I was insulted.
When the economy crashed I didn’t look at doing it, because everything was in crazy flux so I just kept my head down. Figured it wasn’t a good plan to try and refinance in that atmosphere.
Now, however, things seem to have settled in. The economy hasn’t started coming back yet, but people aren’t freaking out as much about it. Things seem to have stabilized a bit. I heard interest rates were pretty low right now, so I decided maybe it was time to take another look at my mortage. BECU’s loan rate page was looking pretty good, so I proceeded with the application.
I managed to lock in 4.750% fixed rate for a 10-year term. That increases my monthly payments somewhat, but I think it’s worth it in the long term.
Currently, I have a 6.000% fixed rate 30-year loan, and I have about 20 years left on it. I’m on the bi-weekly payment plan, which means I make two extra payments per year, which saves me some money. Here’s what it looks like:
I just hate the idea of giving the bank that much “free money” in interest. I also hate the idea of being 57 years old before it’s paid off.
So, I just got an online approval, paid the application fee and rate lock fee for a new loan through BECU that will have these terms:
Assuming I keep those payments up, I’ll be saving $84,000 in interest. Also, I’ll have it paid off at age 46. That won’t suck too bad.
These numbers for monthly payments aren’t completely accurate. They don’t include the insurance and real estate taxes, which add $300/month to the payment. My current payment is $1470. My new payment will be $2150.
That seems like a big jump, but it is not as big as it seems because I have been paying extra for the last couple of years. I’ve been paying $1700/month, even though the payment was only $1470. Therefore, this only increases my monthly output by $450. Given that for the last year I have been paying about $1500/month extra (more than the minimum payments) on all of my other bills, I’m pretty sure this won’t be a big impact for me. It will slow down payoff of some other bills a little, but that $84,000 will be well worth it.