# Refinance my home? or just keep going? **URL:** \ **Category:** Factual Questions\ **Created:** [December 3, 2014, 3:50am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201 "2014-12-03T03:50:56Z")\ **Posts on this page:** 12\ **Page:** 1
**Author:** ![AKWolfsean](https://avatars.discourse-cdn.com/v4/letter/a/e9bcb4/32.png) [@AKWolfsean](https://boards.straightdope.com/u/AKWolfsean)\ **Post date:** [December 3, 2014, 3:50am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/1 "2014-12-03T03:50:56Z")
Refinanced my home about 6 years ago – lower rate, and shortened the loan to 15 years instead of 30. I keep getting tons of loan companies telling me this is a great time to refinance at a lower rate. The rates ARE lower. But I thought I was finally getting to a point where more of my monthly payment was starting to go toward principal, instead of the dreaded interest. If I refinance again, am I not just going to start all over again paying interest — with very little going toward my principal? ---
**Author:** ![Amateur\_Barbarian](https://avatars.discourse-cdn.com/v4/letter/a/59ef9b/32.png) [@Amateur\_Barbarian](https://boards.straightdope.com/u/Amateur_Barbarian)\ **Post date:** [December 3, 2014, 4:16am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/2 "2014-12-03T04:16:03Z")
Can you shorten the term again? Remember that there’s no hard rule that says loans have to be multiples of five years. Do the math with all fees etc. on either the same number of remaining years or some fewer. ---
**Author:** ![md2000](https://avatars.discourse-cdn.com/v4/letter/m/73ab20/32.png) [@md2000](https://boards.straightdope.com/u/md2000)\ **Post date:** [December 3, 2014, 4:22am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/3 "2014-12-03T04:22:03Z")
The proportion that goes toward principle depends on the amortization period left, not the start time. If you want a 9-year mortgage, get a 9-year mortgage. Same paydown, probably more and an even shorter amortization if you keep the same payments but a lower interest rate. ---
**Author:** ![needscoffee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/needscoffee/32/1076_2.png) [@needscoffee](https://boards.straightdope.com/u/needscoffee)\ **Post date:** [December 3, 2014, 5:12am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/4 "2014-12-03T05:12:38Z")
Or get another 15-year mortgage, but pay it off as though it were a 9-yr mortgage, with extra money sent in each month to be applied to the principal (to equal what a payment would be on a 9-year amortization schedule). ---
**Author:** ![usedtobe](https://avatars.discourse-cdn.com/v4/letter/u/ec9cab/32.png) [@usedtobe](https://boards.straightdope.com/u/usedtobe)\ **Post date:** [December 3, 2014, 5:22am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/5 "2014-12-03T05:22:59Z")
To answer the Q: Yes, a new loan starts the whole thing over - plus origination fees, closing costs, etc. You’d have to get one hell of a rate to offset the costs. And getting into the habit of re-fi is a bad way to go. (IMO) ---
**Author:** ![needscoffee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/needscoffee/32/1076_2.png) [@needscoffee](https://boards.straightdope.com/u/needscoffee)\ **Post date:** [December 3, 2014, 6:07am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/6 "2014-12-03T06:07:05Z")
> [@usedtobe](#): > > To answer the Q: > > Yes, a new loan starts the whole thing over - plus origination fees, closing costs, etc. > > You’d have to get one hell of a rate to offset the costs. > > And getting into the habit of re-fi is a bad way to go. (IMO) Not correct. I refi whenever the rates drop enough. No points, no-closing cost loan, my broker eats the fees. Finishing up a new refi right now. The rate isthe same as the going rates that include points and closing costs. I’ve done the homework. ---
**Author:** ![LSLGuy](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/lslguy/32/5813_2.png) [@LSLGuy](https://boards.straightdope.com/u/LSLGuy)\ **Post date:** [December 3, 2014, 5:29pm UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/7 "2014-12-03T17:29:23Z")
> [@usedtobe](#): > > … And getting into the habit of re-fi is a bad way to go. (IMO) Refi-ing to take out cash is a fool’s game. Refi-ing the current balance to reduce the interest rate is smart business provided the fees are low / nil. ---
**Author:** ![wellanuff](https://avatars.discourse-cdn.com/v4/letter/w/57b2e6/32.png) [@wellanuff](https://boards.straightdope.com/u/wellanuff)\ **Post date:** [December 4, 2014, 2:53am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/8 "2014-12-04T02:53:46Z")
Here is a quick and dirty answer: Find out what the fees will be. Multiply the difference between your old rate and the new rate by the balance remaining on your loan. The answer is roughly what you would save on interest payments in the first year of your refinanced loan. Divide that answer by 12. That is your monthly interest saving. How many months will it take before the savings are greater than the fees? Do you expect to still be living in the house after that many months? Yes? Refinance. To address your concern about starting over, just keep paying the same amount as your old payment on the new loan! (You will have to account for changes in your escrow payment, etc. Make sure your new loan permits prepayment. Standard loans do. Also make sure the extra that you will be paying will be applied to the principal balance and not put in your escrow account.) You will end up paying off the loan even faster than the nine years you have remaining, because the reduction in interest means even more of your payment will go towards principal. ---
**Author:** ![Hampshire](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/hampshire/32/4887_2.png) [@Hampshire](https://boards.straightdope.com/u/Hampshire)\ **Post date:** [December 5, 2014, 1:50am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/9 "2014-12-05T01:50:28Z")
Depends on a handful of variables if it’s worth it. How much principal is left on your mortgage? What is your current rate? What will the new rate be? Will you be refinancing to a longer, shorter, same term? What are the costs involved in refinancing if any? Go to [bankrate.com](http://bankrate.com) and use a mortgage calculator with amortization schedule and run a few scenarios with different rates, terms, etc, to see what your total interest will be over the life of the loan before and after the refi to see just how much you’ll save. Compare that to the refi costs to see if it’s worth your time. ---
**Author:** ![nate](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/nate/32/13085_2.png) [@nate](https://boards.straightdope.com/u/nate)\ **Post date:** [December 5, 2014, 3:04pm UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/10 "2014-12-05T15:04:00Z")
> [@needscoffee](#): > > Not correct. I refi whenever the rates drop enough. No points, no-closing cost loan, my broker eats the fees. Finishing up a new refi right now. The rate isthe same as the going rates that include points and closing costs. I’ve done the homework. How much must the rate drop to allow you to do this with no closing costs? You must have had a really high initial rate, right? ---
**Author:** ![RedSwinglineOne](https://avatars.discourse-cdn.com/v4/letter/r/a9adbd/32.png) [@RedSwinglineOne](https://boards.straightdope.com/u/RedSwinglineOne)\ **Post date:** [December 5, 2014, 5:53pm UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/11 "2014-12-05T17:53:00Z")
> [@needscoffee](#): > > Or get another 15-year mortgage, but pay it off as though it were a 9-yr mortgage, with extra money sent in each month to be applied to the principal (to equal what a payment would be on a 9-year amortization schedule). Or more simply, keep can sending the same payment amount he was sending under the old loan. He will be making the same payment but even more will be going to principal. ---
**Author:** ![needscoffee](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/needscoffee/32/1076_2.png) [@needscoffee](https://boards.straightdope.com/u/needscoffee)\ **Post date:** [December 6, 2014, 7:31am UTC](https://boards.straightdope.com/t/refinance-my-home-or-just-keep-going/706201/12 "2014-12-06T07:31:17Z")
> [@needscoffee](#): > > Not correct. I refi whenever the rates drop enough. No points, no-closing cost loan, my broker eats the fees. Finishing up a new refi right now. The rate isthe same as the going rates that include points and closing costs. I’ve done the homework. > [@nate](#): > > How much must the rate drop to allow you to do this with no closing costs? You must have had a really high initial rate, right? The difference in the rates has no bearing on closing costs. I did not have a really high interest rate. My last refi closed earlier this year at a very nice rate. The rates have since gone down .375%, and since it costs me nothing, I opted to refi again. It’s saving me only $30 a month, but $30 is $30. I have a \*great \*mortgage broker. I check the current interest rates, and I’m getting a very good one. Again, zero closing costs, including appraisal, title, origination charges, no points, etc. I do pay the mortgage back at a significantly higher amount, with the extra applied to principal so that I’m shortening the length of the loan.