Should I Refinance My Mortgage

Question: Should i refinance my mortgage?

(Posted by: D T on 2009-04-01 08:36:00)

I heard if you refinance, you pay more on the interest than the principle during the first few years. After the first few years, your mortgage payment which goes into the principle is increased. For example, a mortgage payment of $1600, $1400 would go into the interest and $200 would go into the principle. After the first few years, $1000 would go into the interest and $600 would go into the principal. If I refinance and save only half a point, would it worth it? (I don't have to pay any cost at all).

Posted by: dustoff on 2009-04-01, 08:43:33

That is true of any mortgage loan - your original one as well as a refinanced (new) one. The balance between interest and principal changes gradually, not abruptly. When looking at a refi, you have to balance the out-of-pocket cost of the refi against the future savings to estimate how long it will take you to "recapture " the refi expenses. That also depends on how long you expect to keep the house.

Posted by: terry on 2009-04-01, 08:44:11

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