Help: Refinace Math from 30yr to 15 yr
Help: Refinace Math from 30yr to 15 yr
Current Mortgage:
Amount: 416,000
Term: 30 years fixed
Rate: 3.625%
Payment: $1,897.17
Additional Principle: $1,086
Total Monthly Payment: $2,983.18
Total Interest paid so far: $28,566
Proposed Refinance:
Amount: $347,356 plus $10,000 (total refinanced cost, including points, titled, etc.) = $357,356.60
Term: 15 Years fixed
Payment: $2,382.82
Total interest in 15 years: $71,550
Difference in payment, including additional principle amount is $600 a month (2,983.182,383.82)
If I continue with 30 years mortgage and pay the additional principle of $1,086/month, the total interest will be $109,919.
If I refinance to the 15 years mortgage, and assume I invest the $600/month and generate 5% return for the next 15 years, I will pay $52,750 in interest. Here’s how I came up with this number:
Total Interest Paid so far in existing mortgage = $28,566
Total Interest will be paid in new 15 years mortgage = $71,550
Less Total Interest from $600/month assuming 5% return for 15 years = $47,366
Assuming my math is correct, I will save over $57,000 in interest by going with the 15 years refinance, despite paying $10,000 in fees.
Am I missing anything from these calculations? Please feel free to critique my math.
Amount: 416,000
Term: 30 years fixed
Rate: 3.625%
Payment: $1,897.17
Additional Principle: $1,086
Total Monthly Payment: $2,983.18
Total Interest paid so far: $28,566
Proposed Refinance:
Amount: $347,356 plus $10,000 (total refinanced cost, including points, titled, etc.) = $357,356.60
Term: 15 Years fixed
Payment: $2,382.82
Total interest in 15 years: $71,550
Difference in payment, including additional principle amount is $600 a month (2,983.182,383.82)
If I continue with 30 years mortgage and pay the additional principle of $1,086/month, the total interest will be $109,919.
If I refinance to the 15 years mortgage, and assume I invest the $600/month and generate 5% return for the next 15 years, I will pay $52,750 in interest. Here’s how I came up with this number:
Total Interest Paid so far in existing mortgage = $28,566
Total Interest will be paid in new 15 years mortgage = $71,550
Less Total Interest from $600/month assuming 5% return for 15 years = $47,366
Assuming my math is correct, I will save over $57,000 in interest by going with the 15 years refinance, despite paying $10,000 in fees.
Am I missing anything from these calculations? Please feel free to critique my math.
Re: Help: Refinace Math from 30yr to 15 yr
The original loan amount and interest you have already paid don't matter anymore. They're gone. You need to compare all of this from the current mortgage balance and what will be better going forward from today.

 Posts: 4761
 Joined: Thu Dec 27, 2018 3:06 pm
Re: Help: Refinace Math from 30yr to 15 yr
+1
Your $600 monthly savings is correct only if the remaining term of your current mortgage is 15 years, i.e., identical to the term of your refi loan and you are using the same mortgage principal balance for the new and old loans.
To calculate your true monthly savings and payback period:
1. Using your current mortgage’s principal balance and interest rate, use Excel or online calculator to calculate what your monthly payment would be to pay it off over the same term (15 years) as your proposed refinance.
2. Determine your monthly refi savings (= 15year monthly payment for current mortgage per Step 1 minus monthly payment amount for refinancing your current mortgage balance via 15 year refi loan).
3. Refi net cost (= points, fees, etc.) divided by monthly savings = # months payback.
Your $600 monthly savings is correct only if the remaining term of your current mortgage is 15 years, i.e., identical to the term of your refi loan and you are using the same mortgage principal balance for the new and old loans.
To calculate your true monthly savings and payback period:
1. Using your current mortgage’s principal balance and interest rate, use Excel or online calculator to calculate what your monthly payment would be to pay it off over the same term (15 years) as your proposed refinance.
2. Determine your monthly refi savings (= 15year monthly payment for current mortgage per Step 1 minus monthly payment amount for refinancing your current mortgage balance via 15 year refi loan).
3. Refi net cost (= points, fees, etc.) divided by monthly savings = # months payback.

 Posts: 208
 Joined: Wed Sep 30, 2015 6:53 pm
Re: Help: Refinace Math from 30yr to 15 yr
Not sure who you are refinancing with, but that seems really expensive. Look at Lenderfi.com. I am in process of refinancing and found out about them here.
Re: Help: Refinace Math from 30yr to 15 yr
i got it from aimloan.com, 15 yrs fixed 2.5% with $8k in points. I'll take a look Lenderfi.com. I think Better.com doesn't have lender's fee so it might be a little cheaper.Ryanlion8506 wrote: ↑Tue Sep 10, 2019 5:11 amNot sure who you are refinancing with, but that seems really expensive. Look at Lenderfi.com. I am in process of refinancing and found out about them here.
Re: Help: Refinace Math from 30yr to 15 yr
For more flexibility in the future and without paying the costs of a refinance, I would just pay down principal on the existing mortgage. You have a very good interest rate on the existing mortgage.
Re: Help: Refinace Math from 30yr to 15 yr
So you're currently at 3.625%, and proposing going to 2.50%? On a principle balance of $347,000? And paying $10,000 in closing costs? Is that all correct?
If so, your annual interest savings is about $4,250 (1.125% X $347,000). It would take over two years to pay back your $10,000 upfront cost.
Back when I was thinking about mortgage refinancing, anything over two years was a wobbler for me. You've got a great rate now  I'd probably keep until I could get the payback below two years. And if I never refinanced, I've still got a great rate at 3.625%.
If so, your annual interest savings is about $4,250 (1.125% X $347,000). It would take over two years to pay back your $10,000 upfront cost.
Back when I was thinking about mortgage refinancing, anything over two years was a wobbler for me. You've got a great rate now  I'd probably keep until I could get the payback below two years. And if I never refinanced, I've still got a great rate at 3.625%.
It's a GREAT day to be alive  Travis Tritt
Re: Help: Refinace Math from 30yr to 15 yr
+1
Everytime that I've considered a refi, I come out almost as good if I just upped my current mortgage to the 15 year payment. This assumes a decent interest rate on your existing mortgage, of course.

 Posts: 208
 Joined: Wed Sep 30, 2015 6:53 pm
Re: Help: Refinace Math from 30yr to 15 yr
I’m currently at 4.25 and looking at anywhere from 3.03.25% depending on what I want to pay. Ranges between 7003000. I would never pay anywhere near 10k to refi unless my rate was horrible. Grab a slightly higher rate, monthly will be little difference.

 Posts: 208
 Joined: Wed Sep 30, 2015 6:53 pm
Re: Help: Refinace Math from 30yr to 15 yr
And I’m going from 30 to 15