Home Mortgage and Refinancing 30 year plan

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J6shin
Posts: 17
Joined: Tue Mar 31, 2020 10:24 pm

Home Mortgage and Refinancing 30 year plan

Post by J6shin »

I'm currently in the process of purchasing a home, and I just wanted to know if this strategy is viable or not recommended for long-term.

If I get a 30 year fixed rate loan for a $1,000,000 home with 25% downpayment, so $750,000 loan, would it be better to choose:
*(all based on today's Lenderfi's rate as an example)

A) 2.875% w/ $15,653 pts & $370,210 in total interest payments

B) 3.125% w/ $7,695 pts & $406,614 in total interest payments

C) 3.5% w/ $4,005 credit & $462,421 in total interest payments

+ With the intention of refinancing to a 15 year in year 15-20?

I'm not sure how to calculate the math correctly. I know interest rates will be different later down the line, but our next home purchase, we have no plan to move, so I was hoping to know monetarily what my best options are.
Topic Author
J6shin
Posts: 17
Joined: Tue Mar 31, 2020 10:24 pm

Re: Home Mortgage and Refinancing 30 year plan

Post by J6shin »

I don’t know if my question made sense, but basically, would it be worth it to take a loan that has a higher interest rate but lower closing costs with the intention of refinancing in 15 years? Or would it be better to take a loan and pay the extra points?
exodusNH
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Joined: Wed Jan 06, 2021 8:21 pm

Re: Home Mortgage and Refinancing 30 year plan

Post by exodusNH »

J6shin wrote: Fri Jan 14, 2022 6:04 pm I don’t know if my question made sense, but basically, would it be worth it to take a loan that has a higher interest rate but lower closing costs with the intention of refinancing in 15 years? Or would it be better to take a loan and pay the extra points?
It depends how long you're going to live there. If you expect to be there 7+ years, the points will work out and ultimately you'll pay less in interest.

You'd have to out it in a spreadsheet to see the exact break even point, but it will eventually be better
exodusNH
Posts: 1926
Joined: Wed Jan 06, 2021 8:21 pm

Re: Home Mortgage and Refinancing 30 year plan

Post by exodusNH »

J6shin wrote: Fri Jan 14, 2022 6:04 pm I don’t know if my question made sense, but basically, would it be worth it to take a loan that has a higher interest rate but lower closing costs with the intention of refinancing in 15 years? Or would it be better to take a loan and pay the extra points?
It depends how long you're going to live there. If you expect to be there 7+ years, the points will work out and ultimately you'll pay less in interest.

You'd have to out it in a spreadsheet to see the exact break even point, but it will eventually be better
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Metsfan91
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Re: Home Mortgage and Refinancing 30 year plan

Post by Metsfan91 »

J6shin wrote: Fri Jan 14, 2022 12:13 pm I'm currently in the process of purchasing a home, and I just wanted to know if this strategy is viable or not recommended for long-term.

If I get a 30 year fixed rate loan for a $1,000,000 home with 25% downpayment, so $750,000 loan, would it be better to choose:
*(all based on today's Lenderfi's rate as an example)

A) 2.875% w/ $15,653 pts & $370,210 in total interest payments -- You'll have $454,537.44 remaining after 15 years. You'll have paid $575,757.2

B) 3.125% w/ $7,695 pts & $406,614 in total interest payments ---- You'll have $461,206.77 remaining after 15 years. You'll have paid $586,002.6

C) 3.5% w/ $4,005 credit & $462,421 in total interest payments ---- You'll have $469,216.09 remaining after 15 years. You'll have paid $599,776.2


+ With the intention of refinancing to a 15 year in year 15-20?

I'm not sure how to calculate the math correctly. I know interest rates will be different later down the line, but our next home purchase, we have no plan to move, so I was hoping to know monetarily what my best options are.
After 15 years, you are paying the least amount in interest and principal with option A, and you have the least amount remaining.
"Know what you own, and know why you own it." — Peter Lynch
Goal33
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Re: Home Mortgage and Refinancing 30 year plan

Post by Goal33 »

3.5 with the credit and then immediately refinance after closing to 3.25 no cost.
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markjk
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Re: Home Mortgage and Refinancing 30 year plan

Post by markjk »

J6shin wrote: Fri Jan 14, 2022 12:13 pm I'm not sure how to calculate the math correctly. I know interest rates will be different later down the line, but our next home purchase, we have no plan to move, so I was hoping to know monetarily what my best options are.
With stuff like this, I'd go with what you know as of today only. You don't know how a future refi will effect you because you don't know what interest rates will be which you already pointed out. Even a 15 year mortgage could be much higher in the future. Prior to the financial crisis (yes I know, a few years back now) a great rate was 6%. So, just take that 15 year refi out of the equation entirely and do what is best for your today based on the options. If you do want to knock the principle down a bit faster over time, you can always make extra principle payments. If in the future a good refi comes up, you can take advantage
chipperd
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Re: Home Mortgage and Refinancing 30 year plan

Post by chipperd »

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