Torn over the idea of refinancing your home? My husband and I have been debating the issue for days. Should we wait for rates to drop even further or lock in on a low interest rate right now? Today my husband and I turned to the trusty Internet to find our answer.
First, using online mortgage calculators I ran the numbers on a 15 year $417,000 mortgage, (the maximum conventional loan amount), at various interest rates. As you can see below the total interest paid on a 4.75% mortgage is roughly $19,000 more than the interest on a loan at 4.25%. $19,000 isn’t chump change but in terms of mortgage interest on a $417,000 home it’s a relatively small number.
- 15 years at 4.75% = $166,840
- 15 years at 4.50% = $157,204
- 15 years at 4.25% = $147,660
Also we are currently paying roughly $2300 in mortgage interest each month on our current loan. In 8 months $2300 in mortgage interest is close to the $19,000 we’d save by waiting.
We’ve been putting aside money to help us shorten the life span of our mortgage for years. We originally signed on for a 30 year mortgage to make certain that we could afford our monthly payments. We purchased the house right after my medical problems began and my husband started a new job, but a few months after purchasing we became comfortable with the payments and began putting extra money aside to pay down the principal.
Since the day we signed the loan papers we’ve been counting down the years until it’s fully paid. Today we started to see the light at the end of the tunnel. We locked in on a 15 year mortgage at 4.75%.