Should I Refinance My Mortgage or Stick with My Current Loan?

[Hunter Jordan]

I’m trying to decide if refinancing my mortgage makes sense, and I’d love some input. Here’s my situation:

Current Loan: 20-year mortgage (started Dec 2023)     

-Balance: $199K     

-Rate: 5.00%

-Monthly Payment: $1,372

-Time Left: 18.5 years

Property: Duplex (I live in one unit, rent out the other for $1,250/month)

I have two refinance options:

20-Year Refinance (6.125% rate)

-New balance: $173K

-Monthly payment: $1,252

-I’d gain ~$26K in immediate home equity

-Planning to still pay $1,372/month to pay it off faster (estimated payoff in 17-18 years)

15-Year Refinance (5.75% rate)

-New balance: $173.5K

-Monthly payment: $1,441

-I’d gain ~$25.5K in immediate home equity

-Higher payment but saves on interest

I also have to come out of pocket $3K for closing for both refinance deals.

Would it make sense to refinance, or should I just stick with my current mortgage? Since I rent out one side for $1,250/month, my out-of-pocket housing cost is pretty low. The 15-year option saves more on interest but increases my payment. The 20-year refi gives me more flexibility, and if I pay extra, I can shorten the term.

What would you do?

[Chris Seveney]

I would not refinance into a higher interest rate - I would keep the existing loan if you can afford the payments

you also will have closing costs invoked to add to the new loan which again does not seem to be worth it in my opinion