Refi

[jonjohn]

I have a question and need advice....

I have had my 30 year mortgage now for 2 years at 4.99%.... I also took out a 2nd mortgage for a roof and some home repairs at 4.59% for 10 years (9 left). I inquired with my bank about a refi and they offered me a 15 year mortgage at 3.99%. This would be my primary and 2nd mortgage combined. My monthy mortgage payment only goes up about $36 per month.... sounds simple and a good idea.. I would cut off 13 years and save about $100.000.... After speaking to my parents about this opportuntiy, they told me not to do it... Everyone else that I have spoken to about it says I would be stupid not to take advantage.

Why are my parents against it? Well, my father says that I can make 2 extra payments a year and knock it down to 15 years without doing anything... I don't like to disagree, but I DO NOT understand that logic.  Advice????

[StartingOver10]

Your Father is right about the two extra payments per year knocking off almost 15 years.  But in your situation refinancing to a 15 at a lower rate is a good idea, provided the refi costs aren't too high. What are they charging you to refinance?

The question I have for you is have you shopped the 15 year rate with other lenders?  I see that a typical 15 year fixed rate is closer to 3% now, not 3.99%

EDIT:  Forgot to answer the actual question about how those two extra payments work:  The trick is this, you pay the extra payments along with your regular mortgage payment and apply the entire extra payment(s) to your principal balance. It is compounding in reverse essentially. You can go to bankrate.com and play around with the mortgage calculator to see the results with any amount you choose. It really works.