We got an 80/20 loan a few years ago when we bought our home in Moses Lake. An 80/20 is when you get a loan for 80% of the purchase price and another loan for 20% of the purchase price. Doing this allowed us to not be required to pay PMI (Mortgage Insurance). Sometimes it's called MIP or MI, but it's all the same. Our 80% loan is around 5.75%, and our 20% loan is at 8%. So, for example, let's say the purchase price was $100,000. Keep it simple. If $80,000 is at 5.75% and $20,000 is at 8%, and they're both 30 year loans, what's my monthly payment? Well, it's about $553.53 on the $80K and about $168.42. This includes $1,000 annual property tax and homeowners insurance of $300. Total monthly payment: $721.95. If I was to get a $100,000 loan at 5.675% interest on my home, which appraises for quite a bit more, meaning that I still wouldn't have to pay PMI, then my monthly payment would be $687.15. That's a $34.80 decrease in my monthly payments. Should I refinance?
I left out some information, didn't I? If I were to refinance, it would cost me about $3,000 in closing costs. If I had $3,000 in cash to pay closing costs, that would be great! In the long run, I would save alot on interest. If I needed to put the closing costs into the loan, I would reap the benefits of the interest saved a few years down the road instead of immediately.
Well, there is more to the story, and that is what you might want to talk with your lender about. Should you refinance, or not? Now is the time to ask, especially if your home loan rate is above 6.5% or so. It's something to think about, if it's financially doable for you.Have a great weekend! I'm going to go take a nap after I gargle with tea tree oil. I've lost my voice!
Connie
Posts
No comments:
Post a Comment