Make Mine A Double?
Does Valerie needs to worry about doing a refinance on her mortgage to pay it off in 15 years?
QUESTION: Valerie and her husband are almost debt free except the home. Their mortgage is 30 years at 5.125% with 24 years left. The balance is $187,700. Should they refinance to a 15-year note or make double payments? Dave explains why they don’t have to and can instead do a simple calculation for their answer.
ANSWER: If you pay a 30-year mortgage the same amount that you would a 15-year mortgage, it will pay off in 15 years. Just do a calculation of what a 15-year monthly payment would be and pay that, and you don’t have to pay closing costs. You would refinance if you could justify the interest you would save by getting a lower interest rate. You’ve got a great rate.
Your monthly payment, not counting taxes and insurance, would be about $1,496 if it were on a 15-year mortgage from today.