# Refinancing

I was talking with a guy at work who had just refinanced after buying a house a year ago. The rate he got was only 1% less than his previous but the lender paid all the closing costs. I said I was happy with my 6% rate, but he pointed out that it costs nothing to save \$100 a month. Would you turn someone down who wanted to give you \$100 a month.

So I’m refinancing. It will cost me nothing and my payment would be less. My broker even said that if I was worried about stretching the payoff date out 15 years again that I could just pay the 13-year amount every month and still be paying less than now and pay it off the same month in 2016.

## 5 thoughts on “Refinancing”

1. After trying to figure out the best deal using the internet… and getting confused by % vs. APR vs. Closing Cost vs. fees etc., I just called my mortage company, Wells Fargo. They have a no closing cost deal (it’s included in the interest rate.) I go from 6.25% to 4.75%, saving \$172 per month. It’s not quite that good, because I’m taking the 14 years left on my loan and stretching it out 15 years, so I need to do a net present value on the \$172 per year, reduce the savings by something like 35% for tax deductions… only that slides, then take the present value of an additional 12 month payments 15 years out… whatever… I’m saving money. Gotta be, right?

2. Mortgage Refinance Calculator

Good refiinance calculator. It calculates the two key things you need to know: How much you save monthly, and how much interest you will pay from this point on with the new loan vs. the current loan. Going to a…

3. One way to look at it is take the interest rate, divide it by twelve (months) and multiply that by your current balance. That’s what you’re paying in interest. If they roll closing costs into the loan then take the new percentage and multiply that by the new balance. That will tell you how much you’re saving per month right now and it won’t change much over the next year or two.

4. Well, I closed today. It really didn’t cost me anything. They even refunded the appraisal fee. The only things I paid up front were this year’s taxes, partial interest, setting up escrow and maybe one courier fee to pay off my old loan. Still that came out to \$3500, but \$2800 was taxes and \$700 was interest and escrow. None of those are really costs since I would pay them anyway.

The bottom line is if I want to pay the new loan off the same month that my old loan would have finished off I will pay about \$45 less per month for the next 12 1/2 years. That’s not much but it’s a lot more than George Bush’s tax cut (for me anyway).