How much interest will refinancing save on my home loan?
I purchased my home for $146,575 home 10 years ago with a 15% down payment and I signed a 30-year mortgage with an interest rate of 11.7% compounded monthly. Interest rates have dropped and now I want to take my unpaid portion and sign a new 30 year morgage that has a 6% compounded monthly how much will I save if I refinance please help….I keep getting my answer wrong
Why didn’t you refinance 5 years ago, or were you still improving your credit rating?
Web search “amortization spreadsheet”. I think I got one from http://www.vertex42.com/ExcelTemplates/excel-amortization-spreadsheet.html that also allows you to enter extra principal payments.
If you don’t have Excel, you could get OpenOffice http://www.openoffice.org/, soon to be LibreOffice (still under beta testing) http://www.documentfoundation.org/download/
I originally bought my home in 2002 @ 7% and refinanced 3 years later @ 5.99% for 20 years. Since it was with my original lender, total closing costs were $170. Payments are $30 more per month, but it shaved 7 years of payments and $62,000 in interest from my loan.
If you refinance for another 30 years, your monthly payments will be much lower, but the longer term will cost you more in the long run than a shorter term. However, as long as you get a loan without a prepayment penalty, you can pay extra towards your principal without being pressured to pay that much every month, which will reduce the number of payments to end the loan earlier (but does not allow you to skip any payments before it is fully paid off).
The following articles will give you links to some online refinance calculators that can help you crunch the numbers:
http://moneygirl.quickanddirtytips.com/loan-refinance.aspx
http://moneygirl.quickanddirtytips.com/how-to-qualify-for-a-mortgage-or-refinance.aspx