<p>What is the downside of getting a 30 year and then just making more than the minimum payment? Rates could go up at any time. If they go down, you just refi again?</p>
<p>You might try shopping around - my credit union had oddball loan durations when we refinanced back in the 1990s.</p>
<p>BCE, that’s what we’re planning to do. We’re figuring out the monthly amount we need to pay to get it down to 15 or 20 years.</p>
<p>BC- you are correct. I will call the credit union</p>
<p>If you are really going to pay the mortgage off early, why not get a shorter term loan?</p>
<p>The rates are lower on shorter term loans.</p>
<p>I didn’t know that longer-term loans have higher rates (haven’t dealt with mortgage since the 1990s) but the longer term gives you more flexibility. You could get a better rate on a 10-year compared to a 15 or 30 but you don’t know what will happen in the next ten years and you might want the flexibility to make lower payments for a while.</p>
<p>I understand that…</p>
<p>But for people that really know they are going to pay the loans off early…</p>
<p>I haven’t looked that carefully into this issue myself, but looking at this superficially, I wonder about these refinancings. </p>
<p>Yes…the rates are lower…but a borrower ends up paying a mortgage for years more.</p>
<p>My brother called me up and wanted to refinance his 30 years mortgage. He had 15 years left on it. He wanted to take out a 30 years mortgage to lower his interest rate 1 percent and lower his payments.</p>
<p>Yes, my brother would have lowered his payments, but he would have increased the amount of years he would have to pay off the loan by 15 years…</p>
<p>I think a better comparison for my brother would have been comparing his existing loan which had 15 years left to a new 15 year loan.</p>
<p>I am just talking off the top of my head. I haven’t looked at the numbers. Numbers don’t lie.</p>
<p>dstark- I agree with your analysis- look at terms close to what you have left. I believe what BC is saying to me is why not get the better rate and pay it off in 27 years even though the term is 30.</p>
<p>I was trying to see if a 20 or 25 year loan had a low enough rate to cut years off and still keep my payment where it is. So far they do not</p>
<p>here is an example of interest rates today, as you can see the difference between the 30 year fix and 15 year fixed is only .7% (conforming loans)… Not a hell of a lot. If the refinancing requires any points, the payoff may not big enough to take the 30 years. I am in the camp to have no mortgage on my back, regardless what interest rate is.</p>
<p>[Mortgage</a> rates, CD rates, auto loans and more](<a href=“http://www.bankrate.com/partners/selaol/]Mortgage”>http://www.bankrate.com/partners/selaol/)</p>
<p>Tom1944…So…if you do refinance…to another 30 years… You save about $200 a year?</p>
<p>That is why I have not bothered yet. If the rates go low enough to cut the term and keep the payment where it is I will refinace. My situation is different in that I do not mind having a mortgage-even in retirement.</p>
<p>I am not a real fan of a mortgage either…especially at retirement years…</p>
<p>I was looking at some numbers…that can be derived at bankrate.com</p>
<p>I compared a 30 year mortgage of 100,000 a year…5% rate…15 years left on it …with a refi…15 year 67,000 mortgage (that is what is still owed after 15 years of payment) 3.3%.</p>
<p>You end up saving about $50 to $60 a month…i can’t remember. :)</p>
<p>This is before the costs of refinancing.</p>
<p>So if you originally had a 200,000 mortgage…after 15 years…you would have paid approximately 1/3 of the principal and would save about 100 to 120 a month…by refinancing… 5% down to 3.3%. If you are starting out with a rate less than 5%… you are obviously going to save less.</p>
<p>And these savings are pre- tax…after tax the savings are less.</p>
<p>I don’t want to trash 1,200 a year…I will take an extra 1,200 a year…</p>
<p>But an interest rate drop of 5 percent down to 3.3 percent…I don’t know…I would think the savings would be a lot more…</p>
<p>Rates drop… A third…the savings don’t.</p>
<p>If you have a pension…you can make a case to have a mortgage.</p>
<p>If you can invest the money and make a higher return than the mortgage costs…than you can make a case for having a mortgage.</p>
<p>You better really make the money though…you can get in trouble if you invest and lose.</p>
<p>If you think rates are going to go up a lot…you can make a case for having a mortgage…</p>
<p>If you aren’t going to stay in your house long…or you are worried about having too much of your net worth in a house…you can make a case for having a mortgage…</p>
<p>If you have money sitting around making 0.1 percent…kind of harder to make a case for having a mortgage. :)</p>
<p>It was said that in order for refi to work, you need a spread of 2% plus, 3% is better. In today’s market, it could make sense if the loan was taken out in the 7% range for a small amount like under 100k. If the balance is $1M, then it should definitly looked into.</p>
<p>Pepole do the refi, not because they want to lower the payment, they want to take out money for other purposes. And that was one of the reason why they caught in the real esate downfall. In the high flying days, they took out huge amount of equity in exchange of risky negative am loans and at the end, they colud not pay it back and lose their home to foreclosure.</p>
<p>Yeah…I agree with you artloversplus…</p>
<p>I have a friend who is a mortgage broker…well he moved recently so I won’t see him much.</p>
<p>He told me there are serial refinancers. Everytime rates drop 0.5… They refinance. The loans are larger than 100,000. I don’t know how large. I don’t think these people are saving much…they used to increase the size of the loans. My friend did not discourage this. ;)</p>
<p>There was a while in the 90’s where you could do a no points, no closing cost refi for a decent competitive rate.</p>
<p>There were two occasions where I refi’ed, the minute I closed I started another refi because the rates had dropped a quarter point. Why not? It cost me nothing.</p>
<p>I’ve refinanced 4 properties in the last year and taken them all to 15 year mortgages at ridiculous rates. I’ll trade a couple hundred a month in increased payments to knock 10 or 15 years off the mortgage all day long. The increase in payment is really all principal that is getting paid down, so it is all coming right back to me anyway.</p>
<p>I hear radio ads for no points/no closing - no idea if the rates are competitive.</p>
<p>I’m in the group that doesn’t like having any debt at all.</p>
<p>Essentially here is whats going to happen in a no points/no cost loan:</p>
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<p>There is no free lunch in this world…</p>
<p>[No</a> Cost Refinance Loans | The Truth About Mortgage.com](<a href=“http://www.thetruthaboutmortgage.com/no-cost-refinance-loans/]No”>The No Cost Refinance: How It Works and What It Really Costs)</p>
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Not an option for most of us.</p>
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<p>In terms of mortgages, one-third rents, one-third has a mortgage and one-third owns their home free and clear. So most don’t have mortgage debt.</p>
<p>I confess I was one of those serial refinancer:D. Everytime rate drops, I refinance. I rode the rate from 8.75 to 4.0. I changed term from 30 to 15 along the way. I made sure they made no money off me except on the rate. So I paid a little more in rate but overall it would still drop compare to the previous rate.</p>