Thursday, April 09, 2009
To Refi or not to Refi, That is the Question
There are new deals out there everyday. If we can just find them our lives would be better. So my illustrious projecter has bit the dirt. After 7 years of people being in awe of the setup, I had to say goodbye to the ole NEC LT240K. But out of the ashes will arise the Panasonic PT-AX200U, a projector with 3 times the contrast at half the price, but the same brightness. I have been going a week without a TV in the living room. It is enough to make start coding again, or go to bed early. The technology in this new projector seems better. It did get rave reviews in 2008. I am amazed at how the price dropped as well. It will arrive tomorrow, just in time for mom to see it. As I talked to the projector people I have to be home to sign for it. So I may just take an easy day tomorrow and get some work done.
For instance I am thinking about doing the ole refinance of the mortgage. I got it at 6% 7 years ago and the rates are near 5% now. Someone once told me a rule that you should do that when there is a point difference. Another person said 2 points difference. So it'd be like the same house for less monthly payment. A difference between $1300 a month and $1000 a month. But, the flipside is you have to pay closing costs again would would probably be $4000 with all of the fees involved. So, even though you save $300 a month you have to have the house for enough months to make up the $4000 to get it done which would be roughly 13 months.
But then you say to yourself, what if we got a new house altogether? Would this whole refinance thing really work? Wouldn't it be better to keep putting more equity into the house so that when we sell it we make a better profit? As I look deep into the recesses of amortization tables I see that when you refinance you have to start paying a much higher percentage of interest all over again. So say I am putting $215 into the equity of the house every month. If I refinance I may end up only putting $50 into equity a month. After two years that would be a loss of around $4,000 that gets put towards principle. So not only does it cost you $4,000 in closing costs, it costs you $4,000 in equity. Now the picture is even bleaker. To make that up you need to add another 13 months of payments. So only after 26 months would you start to break even on the deal. There are new deals out there every day. If you get a bad one, your life may become worse and you wouldn't know it till you got out of it. I think I'll stay where I am at after typing this. Thank you blog.
For instance I am thinking about doing the ole refinance of the mortgage. I got it at 6% 7 years ago and the rates are near 5% now. Someone once told me a rule that you should do that when there is a point difference. Another person said 2 points difference. So it'd be like the same house for less monthly payment. A difference between $1300 a month and $1000 a month. But, the flipside is you have to pay closing costs again would would probably be $4000 with all of the fees involved. So, even though you save $300 a month you have to have the house for enough months to make up the $4000 to get it done which would be roughly 13 months.
But then you say to yourself, what if we got a new house altogether? Would this whole refinance thing really work? Wouldn't it be better to keep putting more equity into the house so that when we sell it we make a better profit? As I look deep into the recesses of amortization tables I see that when you refinance you have to start paying a much higher percentage of interest all over again. So say I am putting $215 into the equity of the house every month. If I refinance I may end up only putting $50 into equity a month. After two years that would be a loss of around $4,000 that gets put towards principle. So not only does it cost you $4,000 in closing costs, it costs you $4,000 in equity. Now the picture is even bleaker. To make that up you need to add another 13 months of payments. So only after 26 months would you start to break even on the deal. There are new deals out there every day. If you get a bad one, your life may become worse and you wouldn't know it till you got out of it. I think I'll stay where I am at after typing this. Thank you blog.
Subscribe to Posts [Atom]