Quote:
Originally Posted by stomachmonkey
Your info is limited but my gut tells me you are not really saving much.
Assume $500,000 float for 30 years. Let's pick a ridiculaous rate of 10%. Costs you $4387 per month.
Move the rate to 9.8% and your payment goes down to $4314.
Basically $70 a month. Or $840 per year. $25200 over the life of the loan.
If you threw an extra payment at it each year you'd reduce the payback by a few years and save $100,000 on the total cost.
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Throw in the points he will pay and do some more math. He won't be right side up for a long time. Yes, 25.2K over the life of the loan (30 years). But, no one stays 30 years these days in one house. If they do, they are extremely unlikely to have the same loan they started with. Meaning, that the 30 years keeps getting put off and points added with each refi make the principle that much more.