Refinance or no?

[HarleyDog]

Current interest rate on our home is 6.25% and only owe around 45k left on a 20yr fixed. I think we are roughly 13yrs in.

We want to do some upgrades. We have electric ceiling heat and run window ac’s in the summer. Our electric bill is outrageously expensive and runs $293 avg per month. So, had an estimate ran on a new natural gas furnace and central air. Estimate came in a little above 10k. Also, currently seeking estimate for gas tankless water heater to also save on utilities. Plus a few other small things we are considering.

Our bank is offering 3.49% on a 10 year / 3.74 on a 15yr and 3.875% on a 20yr. So, with the thought of borrowing an additional 20k for upgrades, that would have us refinancing 65k. Our current house payment is $550 and that’s not an issue to make monthly, but looking to upgrade and save cash.

So, for some of you numbers guru’s out there, is refinancing the smart thing to do? 

[Wes Mantooth]

I would say with that big of change in interest rate it would be an absolute no-brainer.

[fredtoast]

Definitely refinance. You would be crazy not to.

But don't put more money into the house than it is worth. Even though you appear to be planning on staying it that home forever (or at least a long time) a lot of things could happen that would make you want to/need to move.

[jfkbengals]

(11-27-2020, 03:28 PM)HarleyDog Wrote: Current interest rate on our home is 6.25% and only owe around 45k left on a 20yr fixed. I think we are roughly 13yrs in.

We want to do some upgrades. We have electric ceiling heat and run window ac’s in the summer. Our electric bill is outrageously expensive and runs $293 avg per month. So, had an estimate ran on a new natural gas furnace and central air. Estimate came in a little above 10k. Also, currently seeking estimate for gas tankless water heater to also save on utilities. Plus a few other small things we are considering.

Our bank is offering 3.49% on a 10 year / 3.74 on a 15yr and 3.875% on a 20yr. So, with the thought of borrowing an additional 20k for upgrades, that would have us refinancing 65k. Our current house payment is $550 and that’s not an issue to make monthly, but looking to upgrade and save cash.

So, for some of you numbers guru’s out there, is refinancing the smart thing to do? 

That is only adding two years, but almost halving the rate.  Clearly the payment would be reduced over what you are currently paying.  If you do the math, continuing to make the current payment amount might even pay off the refi balance + improvement cost in less time than the current term.  In my view that would be a win-win...

[kalibengal]

(11-27-2020, 03:28 PM)HarleyDog Wrote: Current interest rate on our home is 6.25% and only owe around 45k left on a 20yr fixed. I think we are roughly 13yrs in.

We want to do some upgrades. We have electric ceiling heat and run window ac’s in the summer. Our electric bill is outrageously expensive and runs $293 avg per month. So, had an estimate ran on a new natural gas furnace and central air. Estimate came in a little above 10k. Also, currently seeking estimate for gas tankless water heater to also save on utilities. Plus a few other small things we are considering.

Our bank is offering 3.49% on a 10 year / 3.74 on a 15yr and 3.875% on a 20yr. So, with the thought of borrowing an additional 20k for upgrades, that would have us refinancing 65k. Our current house payment is $550 and that’s not an issue to make monthly, but looking to upgrade and save cash.

So, for some of you numbers guru’s out there, is refinancing the smart thing to do? 

Dude, at %6.25 you need to jump on the current rates, even with fees it will be good for you ....I just refied 2 mortgages and am saving alot of $ 

[HarleyDog]

Good feedback. I think my only drawback is for most of the payment going towards interest again before principal. However my thought was to continue the $550 payment regardless of how much lower the payment would go to increase principle payment.

[SunsetBengal]

(11-27-2020, 06:54 PM)HarleyDog Wrote: Good feedback. I think my only drawback is for most of the payment going towards interest again before principal. However my thought was to continue the $550 payment regardless of how much lower the payment would go to increase principle payment.

I ran the numbers, refi for $65K, for 10 years @ 3.49% would give you a payment of $642.45

If you did just the remainder of the existing principal, the payment would be $444.78

If you did it for $55K, just to cover the new HVAC, the payment would be $543.61

Personally, I think that the smartest route would be to only refi enough to cover the HVAC.  The monthly savings on your energy bill can be rolled into a home improvements account, essentially keeping your same house payment with lower energy costs, and money to fund your other wish list over time.

https://www.calculator.net/payment-calculator.html?ctype=fixterm&cloanamount=55000&cloanterm=10&cmonthlypay=1000&cinterestrate=3.49&printit=0&x=65&y=26

[*bfine32*]

If your number are right and you can pay off $45000 at $550/month for 84 months then the re-fi might wind up costing you more. Amortization schedule is something to consider.No to mention any closing costs, inspection fees, apprasial fees you may have to pay.

[jfkbengals]

(11-27-2020, 07:10 PM)SunsetBengal Wrote: I ran the numbers, refi for $65K, for 10 years @ 3.49% would give you a payment of $642.45

If you did just the remainder of the existing principal, the payment would be $444.78

If you did it for $55K, just to cover the new HVAC, the payment would be $543.61

Personally, I think that the smartest route would be to only refi enough to cover the HVAC.  The monthly savings on your energy bill can be rolled into a home improvements account, essentially keeping your same house payment with lower energy costs, and money to fund your other wish list over time.

https://www.calculator.net/payment-calculator.html?ctype=fixterm&cloanamount=55000&cloanterm=10&cmonthlypay=1000&cinterestrate=3.49&printit=0&x=65&y=26

This.