So I got the paperwork in for the refinance and crunched the numbers with my $40 calculator, and found that I would be best served by NOT refinancing my mortgage.
My plan was to be out in 10 years from my loan, and I can better do that with my current terms while adding little to no stress on my bank accounts. Plus, I’m not forced to spend $5,000 in closing costs, or $200 a month in mandatory payments.
Sure, I’m out the $320 in rate “lock-in” fees, but I found that I have 3 accounts hurting my credit report in the process ($35 of those fees) and that I should close them. I can’t recover the lock-in fee, unfortunately. Still, it beats falling behind $5,000 in principal.
Let this be a note to everyone considering refinancing: do the math before accepting a lock-in. Do not trust your broker or bank — they do not have your best interests in mind.
The Math, for those who are curious. I used the PMT function to find the payment for each situation, and multiplied it out by the terms of the loan. If I continue in my pre-payment plan, I will be out in 8-10 years, depending upon my aggression toward the goal. At that point, my expenses will drop by about $1,200/mo, and I’ll be mostly free of needing to work to live. Taxes and HOA fees not-withstanding.
Comments (2)
they can’t tax you if you don’t have income :)
Sure they can. I’ll still end up paying property tax on the house every year. Not having income would be nice, but I don’t know if I could live like that. Anyway, I don’t have short-term debt, I have my cushion in savings, I’m investing in 401(k) and via prosper loans, and I’m likely to dedicate about 1700/mo to my mortgage starting next month. I’m hoping for out in 5 years by accelerating beyond the $1,200/mo stated above.
I’m also hoping to pile any tax return, windfall payment, and yearly bonus toward my mortgage as well. Probably too late to do it for this year, even though the money’s all sitting in my savings account. (see above about cushion)