Refinance or not to refinance?

[Alvaro Rodriguez]

I would like to know if I’m making the right decision by refinancing or should I just leave it the way it is. Any feedback or advice is helpful

Closing cost is around $5k + 650(Appraisal) = $5,650.

Current situation:

Original loan:$176,000

Unpaid principal balance:$174,243

So I have paid down: $1,757

Interest rate: 4.87%

Principal and interest= $931 a month.

The house came back appraised at the same value as when the original loan was generated.

The two scenarios the lender is offering below:

Scenario 1: I have asked the lender to leave the same amount of the loan which is 79% of the price of the house. But I haven’t heard,

Under this scenario the interest rate would be 3.5% and interest+principal=$740

Which would be a $191 monthly saving

Is it worth paying $5,650 for closing cost for that interest rate and for $191 a month?

Scenario 2

The lender wants to increase the loan back to the original to $176,000, interest rate of 3.7% and the interest+ principal would be: $815

Which would be a $116 monthly savings.

However if we increase the loan back to the original $176,000 I would lose the $1,757 I have paid down from the principal.

In this second scenario I would be paying $5,650 of closing cost plus losing the $1,757 I already paid down for a rough total of $7400

Is this amount ok to get the interest rate reduced?

Thank you

[Guifre Mora]

Originally posted by @Alvaro Rodriguez:

I would like to know if I’m making the right decision by refinancing or should I just leave it the way it is. Any feedback or advice is helpful

Closing cost is around $5k + 650(Appraisal) = $5,650.

Current situation:

Original loan:$176,000

Unpaid principal balance:$174,243

So I have paid down: $1,757

Interest rate: 4.87%

Principal and interest= $931 a month.

The house came back appraised at the same value as when the original loan was generated.

The two scenarios the lender is offering below:

Scenario 1: I have asked the lender to leave the same amount of the loan which is 79% of the price of the house. But I haven’t heard,

Under this scenario the interest rate would be 3.5% and interest+principal=$740

Which would be a $191 monthly saving

Is it worth paying $5,650 for closing cost for that interest rate and for $191 a month?

Scenario 2

The lender wants to increase the loan back to the original to $176,000, interest rate of 3.7% and the interest+ principal would be: $815

Which would be a $116 monthly savings.

However if we increase the loan back to the original $176,000 I would lose the $1,757 I have paid down from the principal.

In this second scenario I would be paying $5,650 of closing cost plus losing the $1,757 I already paid down for a rough total of $7400

Is this amount ok to get the interest rate reduced?

Thank you

Alvaro, you make this so complicated for yourself and others to respond to a small question and you make it into a geometry equation.

It's simpler than you think.

Question 1) what is your goal? Short and longterm.

save monthly.

save interest through the life of the loan.

Invest in more real estate.

2) Are you refinancing to pull cash out in the next 2-3-5-7 years?

3) how many months have you paid in interest?