Quote:
Originally Posted by cougjunkie
I am working on a refi right now for a client, they have a very small home in rural Utah, the appraised value was 103,000. They currently owe 95,000.00. They plan on living in this home for at least 10-15 more years if not longer. So this is their long term plan for now.
If they refinance I can drop their rate 7/8th of a percent (6.875% down to 6%) however because of the small loan amount it will only change their payment about $35 a month. I ran an amortization schedule and if they pay the $35 extra per month towards their mortgage instead of paying it off in 360 months they will pay it off in 308. Also after 5 years depending on appraised value they will be able to drop the mortgage insurance on the loan, which will be another $44 a month. If they apply $79 a month towards their mortgage after 5 years they will pay of their house in 264 months.
All the borrower can see is the measly $30 savings (eventhough it is about 5% of his payment) and not the long term benefits, now on a loan amount this size I dont make jack so I dont really care if he does it or not and maybe I have my mortgage goggles on but does this make sense to do for anyone else?
*Closing costs will be about $2000 total. So his loan amount does go up as we will roll it in, but that is including in the amortization schedule.
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I would not do this, but I also didnt read past the first sentence, where you said the home was in rural Utah.