Is it worth it to refinance from a 30 year 6.50% to a 25 year 5.5%?

My loan officer recently emailed me and advised me that %26quot;Rates have hit a ridiculous low (5.5% on a 30/25 year term and 4/875% on a 15 year term). I am refinancing a lot of people on 25 year loans keeping their payment about the same as it is on their 30 year loan and shaving years off the back of the mortgage. If we refinance your loan from 6.50% even with the Mortgage Insurance your payment will be cheaper and you can have a 25 year term taking almost 4.5 years off the back of the loan.%26quot; I am currently paying my mortgage bi-weekly and this is said to shave off approx. 7 years off the loan. Also my husband and I would like to refinance but be able to pay a lower house payment rather than shortening the life of the loan, but we don閳ユ獩 necessarily need to go this way either. What would be the best option for us? Also just another piece of information is that we just purchased this home in May 2007 and we have already refinanced one time to get my husbands name on the loan with me.

Is it worth it to refinance from a 30 year 6.50% to a 25 year 5.5%?

Usually if the percentage is a 1 % or more and the refi charges aren't very much, then its usually a pretty good thing to do. looking at what you wrote it seems the 15 year note would be the better rate at 4.875% . You could also if your able to afford it every month or two send a check of whatever amount you decide to be put on the pronciple of the loan and it will add quickly to reducing the balance, cutting the time on the loan dramatically.(a 30 year mortgage at 100 a month extra will cut the loan time by roughly half)

Is it worth it to refinance from a 30 year 6.50% to a 25 year 5.5%?

What are the closing costs of the refinance? It seems like a good idea, especially if the closing costs are not high (not more than $2000) and you can lower your monthly payment. Good, but not as good, if you can shorten the term of the loan.

Is it worth it to refinance from a 30 year 6.50% to a 25 year 5.5%?

This is insane. You already refinanced once already, and you want to do it again? Since there is PMI involved, you obviously don't have a lot of equity built up. 6.5% is a fine rate of interest. If he can get you down to a 5.5% on a 30 year mortgage with no money in and no money out, THEN you should begin to think about it.

Your LO is sending this to everyone in his address book. He just wants your business and your money.

Think about this. If you are paying bi-weekly, and this will shave 7 years off of your 30 yr mortgage, wouldn't that in effect become a ***23*** year mortgage? Plus, you could drop your payments back to the 30 year plan in the event you experience hardship in the future.

Dropping the term of the loan from 30 to 25 years would increase your monthly obligation, not lower it. You would want to drop at least 2% before this begins to look like it might make sense.

Is it worth it to refinance from a 30 year 6.50% to a 25 year 5.5%?

I agree with others. If there are no prepayment penalties on your existing loan and no closing costs on your new one, then only would it make sense.

Use excel to run some amortization schedules (its free with Microsoft office, I'm amazed at how many people don't use this tool). I ran some numbers for you. For example, a 30 yr loan for $100,000 at 6.5% APR will make you pay $632 per month, whereas a 25 year loan for the same amount ar 5.5% will work out to monthly payment of $614. I don't think that makes much of a difference. But again, we are asuming that there absolutely no penalties or closing costs.

You can afford to pay bi-weekly, so my suggestion is to hold off till you accumulate some equity and then possibly switch to a lower term loan.