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Paging Math/IIT types
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Paging Math/IIT types
k so I have a mortgage at 4.25%, 15 yr term. I'm 2 yrs in. Original loan amount was 400k, now the principal is 355k.
1) one mortgage agent is offering me 3.375% no points no cost, 15 yrs.
2) another agent is offering me 3.2% APR, 10 yr term, 8k closing cost.
I don't think either option is good enough to move on. What do you think?
TIA
1) one mortgage agent is offering me 3.375% no points no cost, 15 yrs.
2) another agent is offering me 3.2% APR, 10 yr term, 8k closing cost.
I don't think either option is good enough to move on. What do you think?
TIA
Bittu- Posts : 1151
Join date : 2011-08-19
Re: Paging Math/IIT types
I'd like somebody to run the numbers and tell me how I look with each options.
Bittu- Posts : 1151
Join date : 2011-08-19
Re: Paging Math/IIT types
Option 1: Total interest $ 97,897.55, $ 2516 monthly payment. Will be done in oct 2026.
Option 2: Total interest $ 60,293.29 +8000=68,293.29, monthly payment $ 3460.78. Will be done by oct 2021.
Option 3: Include the closing costs in the principal. So Principal is $ 363,000. Total interest for that:61,652.01+8000. Monthly payment:3,538.77.
Option 4: Take option 1, but pay option 2's monthly payment (so you're paying $ 884.78 extra every month). Total interest: $ 65847.69. Will be done by Feb 2022
I am no math/IIT person. I took the help from here:
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx
If I were you, I'd choose option 4, but you got to be disciplined to pay the extra payments every month.
Option 2: Total interest $ 60,293.29 +8000=68,293.29, monthly payment $ 3460.78. Will be done by oct 2021.
Option 3: Include the closing costs in the principal. So Principal is $ 363,000. Total interest for that:61,652.01+8000. Monthly payment:3,538.77.
Option 4: Take option 1, but pay option 2's monthly payment (so you're paying $ 884.78 extra every month). Total interest: $ 65847.69. Will be done by Feb 2022
I am no math/IIT person. I took the help from here:
http://www.bankrate.com/calculators/mortgages/mortgage-calculator.aspx
If I were you, I'd choose option 4, but you got to be disciplined to pay the extra payments every month.
Guest- Guest
Re: Paging Math/IIT types
Option5: Add the 8000 to the principal (347,000), take option 1, pay option 2 mortgage. Total interest : $ 63,884.04. Will be done by jan, 2022.
I guess we need to think abt refinancing too. We are currently paying 3.875 on 15 yr.
I guess we need to think abt refinancing too. We are currently paying 3.875 on 15 yr.
Guest- Guest
Re: Paging Math/IIT types
Bittu wrote:k so I have a mortgage at 4.25%, 15 yr term. I'm 2 yrs in. Original loan amount was 400k, now the principal is 355k.
1) one mortgage agent is offering me 3.375% no points no cost, 15 yrs.
2) another agent is offering me 3.2% APR, 10 yr term, 8k closing cost.
I don't think either option is good enough to move on. What do you think?
TIA
>>> Without running the numbers, what's the downside to #1? Your payments will be lower. Alternatively, you may choose to do an additional principal pay down each month and pay the loan off earlier.
Kris- Posts : 5460
Join date : 2011-04-28
Re: Paging Math/IIT types
Bittu wrote:k so I have a mortgage at 4.25%, 15 yr term. I'm 2 yrs in. Original loan amount was 400k, now the principal is 355k.
1) one mortgage agent is offering me 3.375% no points no cost, 15 yrs.
2) another agent is offering me 3.2% APR, 10 yr term, 8k closing cost.
I don't think either option is good enough to move on. What do you think?
TIA
Bittuboy,
Wanna live in peace without bother and reckless abondon? Your term now is 13 years without refi. You do not know how long you will live. Assume you will be waukay till 80 for now (you may want to read my first sentence again).
The refi does not make a great diff to your payments (after reading Kinnera's options) except for a few hundred. Spend those few hundred on Roth IRA or 529 for beta/i. Or better yet buy a camera or take a Hawaii vacation or even go Machupichu. You do not go Machupichu everyday. The advantage of paying higher mortgage is that you get a larger tax break.
Period. For further information read my signature below. :-)
The Absolute Zero- Posts : 655
Join date : 2011-04-29
Re: Paging Math/IIT types
Thanks everyone, for your comments. Thanks Kinnu for all those options xoxo
Bittu- Posts : 1151
Join date : 2011-08-19
Re: Paging Math/IIT types
The Absolute Zero wrote:Bittu wrote:k so I have a mortgage at 4.25%, 15 yr term. I'm 2 yrs in. Original loan amount was 400k, now the principal is 355k.
1) one mortgage agent is offering me 3.375% no points no cost, 15 yrs.
2) another agent is offering me 3.2% APR, 10 yr term, 8k closing cost.
I don't think either option is good enough to move on. What do you think?
TIA
Bittuboy,
Wanna live in peace without bother and reckless abondon? Your term now is 13 years without refi. You do not know how long you will live. Assume you will be waukay till 80 for now (you may want to read my first sentence again).
The refi does not make a great diff to your payments (after reading Kinnera's options) except for a few hundred. Spend those few hundred on Roth IRA or 529 for beta/i. Or better yet buy a camera or take a Hawaii vacation or even go Machupichu. You do not go Machupichu everyday. The advantage of paying higher mortgage is that you get a larger tax break.
Period. For further information read my signature below. :-)
AZ,
If he took option 1 (15 yr @ 3.375 for 355k), but paid the same monthly payments as he's doing now (around $3009), i.e $493 extra, he'll be done by oct 2023 and will be saving $ 28,463 in interest. He does that without spending a single dollar from his pkt for refinancing. Not a bad deal, eh?
Guest- Guest
Re: Paging Math/IIT types
kinnera wrote: AZ,
If he took option 1 (15 yr @ 3.375 for 355k), but paid the same monthly payments as he's doing now (around $3009), i.e $493 extra, he'll be done by oct 2023 and will be saving $ 28,463 in interest. He does that without spending a single dollar from his pkt for refinancing. Not a bad deal, eh?
Assuming he lives up to 2023 :-) I said that part in my post. Read it again please.
The Absolute Zero- Posts : 655
Join date : 2011-04-29
Re: Paging Math/IIT types
The Absolute Zero wrote:kinnera wrote: AZ,
If he took option 1 (15 yr @ 3.375 for 355k), but paid the same monthly payments as he's doing now (around $3009), i.e $493 extra, he'll be done by oct 2023 and will be saving $ 28,463 in interest. He does that without spending a single dollar from his pkt for refinancing. Not a bad deal, eh?
Assuming he lives up to 2023 :-) I said that part in my post. Read it again please.
AZ, if that is the thinking process, then why even bother buying a house, invest in Roth IRAs, 529s, etc?
Guest- Guest
Re: Paging Math/IIT types
kinnera wrote:AZ, if that is the thinking process, then why even bother buying a house, invest in Roth IRAs, 529s, etc?
For the family. 529 won't work for HIM. Roth IRA has a beneficiary designated. So his family will do well. :-) My philosophy in life is, I can go to dogs or do anything but none else should suffer when I die.
The Absolute Zero- Posts : 655
Join date : 2011-04-29
Re: Paging Math/IIT types
compared to your current loan,Bittu wrote:k so I have a mortgage at 4.25%, 15 yr term. I'm 2 yrs in. Original loan amount was 400k, now the principal is 355k.
1) one mortgage agent is offering me 3.375% no points no cost, 15 yrs.
2) another agent is offering me 3.2% APR, 10 yr term, 8k closing cost.
I don't think either option is good enough to move on. What do you think?
TIA
1) option 1 gives you a $19,630 reduction in the present value (pv) of the total cost;
2) option 2 gives you a $16,107 reduction in the pv of the total cost.
the net effects are as if you, at present, had an additional $19,630 (or $16,107) to invest at 3.2%. if the closing cost of option 2 were $4,500 rather than $8,000, options 1 and 2 would be about equally attractive. if you can afford the additional monthly payment, option 2 could be better than option 1 because it would pay off your loan 5 years earlier.
note: i took the cost of capital to be 3.2%, and discounted the monthly cash flows ($3,008.73, $2,545.79, $3,503.56 respectively for "no change," option 1, and option 2) at that rate to arrive at their total pv (not shown) over the (remaining) life of the loan in each of the three cases.
get someone to check these numbers and conclusions.
Jeremiah Mburuburu- Posts : 1251
Join date : 2011-09-09
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