Is it worth it to refi?

[SantaMar]

I've currnetly in an expedited 20yr biweeekly term at 5.25% through Wells Fargo. Expedited meaning I pay an extra payment a year.   I have 156 payments or 13 yrs left at this pace.  My payooff is 158k, appraisal came in at 240k....  I was about to close on a 15yr refi at 3.1 where I caught a huge mistake in the paperwork. 

The way I see it is my payment stays the nearly the same ($15 less) but I have closing costs and an addititonal 2 years to factor in.  The mortgage advisor that I've been dealing with states that the refi into the new 15 yr is the way to go because the principle and interest are near equal whereas my current loan is front loaded where I'm just  paying the interest up front at a faster pace.  He obviously wants my refi but is what he's saying correct?  Or is it even worth it to refi?

[tooleman694]

Will you be doing an extra payment on the new 15. It might be worth it then.

[JM-AM]

My personal opinion...

While he has some merit to what he says its not something I would choose.

You technically are in a 30 year loan and opted for biweekly payments to save on interest and save on time to have home paid off. While most do not know it but you could have set yourself on the biweekly payment without a formal agreement with creditor.

What I would end up doing is refinance the loan since you will be staying in home for several years to come. I would still choose the 30 year over the 15 year unless you know 100% you will never need additional money for some type of emergency over the next 15 years. 

Anyway thats a choice you will make...

Reason I opt for 30 year refinance, I can still pay biweekly payments which would be lower then your present payment so you are still on your expedited 20year pay off. The difference now is you can apply the savings you will receive to your principle payment biweekly also and probably have your home paid off between 10-15 years. Also if some type of emergency comes up I am not stuck scrambling how to pay my mortgage and whatever else. 

Ultimately with todays rates no matter which way you would choose to refinance if staying in your home it will be beneficial and save you thousands of dollars in interest.

[SantaMar]

Thanks for the quick replies  Well with the proposed incorrect p&i payment was about $400 moer than what it actually is.  i was seroulsy considering a 30yr refi at 3.5 because I was proposed to save over $700 a month where finding the mistakIe is actually about $400.   My frame of reference is a p&i payment of $1175.  with the 15 yr biweekly can it be paid faster than 13 yrs with a payoff of 165k? (My payoff plus closing costs)

[JM-AM]

Yes it can be done. I may shop that rate if I was you It may bring up your savings some. 3.1 for 15years sounds a little high.

Also 7000 in closing also sounds high on 158k balance.

While you may want to do business with whom you been talking to, I would still get other rates and estimates on closing fees. See how they match up and compare. Gives you some bargaining power.

Good luck with your decision.

[SantaMar]

got it thanks and I assumed a portion of that was to go into escrow but I will look at figures again more closely

[StartingOver10]

JM-AM has very valid points and I agree with what she said.

What I don't agree with is what your LO said about the current loan you are on being "front end loaded with interest".

You probably are on a simple interest loan just like most mortgages today. Check your note to be sure, but I can almost guarantee that your interest is a simple interest loan which means you pay interest on the outstanding balance for the period due only.

Its always a good idea to shop your loan with other lenders, but your LO in particular sounds like he would say anything to get the deal, even if its not true. It would be a very rare mortgage to front loan the interest in the deal. That is/was common in car financing and we used to call it the Rule of 78's, but not in mortgages. If you look at at amortization schedule it may appear to have front end loaded interest, but that is not actually the case. The interest amount is larger because of the term (mainly) and the small amount applied to principal.