Is it worth it to refinance my mortgage?

The details: Currently owe about $80k on the house, it's worth $95k (I live in a rural area). Current interest rate is 5%. New interest rate is 3.875%. Quicken Loans is the mortgage company. Is it worth it to refinance, considering the costs and fees?

I am in year 3 of the current 30-yr mortgage, I understand that after the refinance, even if the payment is lower, the amount of principal in the newly-refinanced payment may be less than what I'm paying now. I am putting a little extra each month toward the principal. I am 48.

Another option: should I look at the 15-yr loan, and see if I can afford the monthly payment?

Thanks!

Update:

Angry Bird: yep, that's kinda where I was headed too. How much can a person save in the long run. Thanks!

Update 2:

Qarrri.... lmao... get off my butt? Seriously? I didn't ask you if I should get a second job. You know NOTHING about my situation. Focus on the question next time. Don't judge. Just give advice. Got it?

Update 3:

Y Dobon: EXCELLENT info, thanks much. Appreciate it!

Update 4:

Excellent advice Godged, thank you so much! Yeah, I've decided to pass on the refi.

3 Answers

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  • 8 years ago
    Favorite Answer

    The new rate should save you about $639 per year in mortgage payments.

    You'll have to look carefully at the fees and closing costs. Add those all up and divide by $639 and you'll find out the number of years you'll have to keep the property for the refi to break even.

    If your plan is to keep the property considerably longer than that timeframe, the refi is probably worthwhile.

    Don't pay any points though. The money spent on points would be better off invested elsewhere (like an S&P 500 index fund).

  • godged
    Lv 7
    8 years ago

    If you are seriously considering a refi, look at someone besides Quicken. There may be a better deal locally, mainly on the closing costs. Lenders in the Quicken family of lenders tend to offer a great rate but staggeringly high closing costs. These costs do not come out of your pocket, but are rolled into your loan.

    You may be able to refi and reduce the term significantly, you need to check that out as well.

    Source(s): Oregon Realtor
  • 8 years ago

    Google: Should I re-finance my home calculator.

    You may be better off putting the thousands in closing costs toward the principal of your home instead. To see how much a mortgage would run you google:

    Mortgage Amortization Schedule.

    Compare the monthly payments on a 15 year and a 30 year.

    Opinion: It's not about lower payments, its about how much you can save in the long run.

    I would not re-finance, and pay thousands just to barely save 1%.

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