Should You Refinance Your 30-Year Mortgage To A 15-Year Mortgage Or Just Send In Extra Payments?

Should You Refinance Your 30-Year Mortgage To A 15-Year Mortgage Or Just Send In Extra Payments?

And also refinancing a 30 year 15 year mortgage actually saves you money obviously talking about buying a new home .
Getting 30 for 15 yes it will save you money but I'm talking about refinancing you have a 30 year mortgage you've been working on that for some time years and now the bank is trying to get you to refinance into a 15 year loan telling you it will save you money is that right ok, We're going to break these numbers down in training today, everyone, it's Mike Adamson on this channel .
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future exercises In today's video we will talk about does it make sense and does it save you money to refinance zeros for a 30-month mortgage a year over and over this is a mortgage you've been working on for a few years you've been living in this house and now the bank is trying to get you to pay back in a 15-year mortgage that doesn't make sense to you do this and is it actually saving you money on interest which is the number one thing you know if I saw the other videos on this channel We obviously love to save money which is just a benefit Go straight to the banks we want to keep this for ourselves to pay off your debts and start building wealth Anything that allows us to pay less interest is the thing we usually like a lot so you know it No point in aim 30-15 years and do it refinance you know it's very popular topic now on every bank out there trying to figure out if you're on facebook if you use google anywhere you might see micro ads There is as everyone says get to know about refinancing it for 15 years so you can save money correctly and somehow this will save you money so I wanted to break these numbers, it is a great question we got from one of our subscribers here on the channel and also does it make sense to do that that refinancing for fifteen years or is there a better way or is there a better way to get rid of this debt and pay it off so what I want to do is I really want to show the numbers and so what we're going to do Are we going to discredit the loan calculator here and we're going to use some index numbers and you know let's want to create a scenario Here and so using the numbers we've seen before you know the interest rates are a little bit less than the least let's go to the four let's say this individual has four interest rate on $200,000 so this $200,000 house was a 20 low rate and they have a $200,000 mortgage right at 4% And they've been working on this is a 30-year mortgage and what we want to do is usually people will refinance the average person refinance or consider getting refinanced in about five years tick ok also shortly after Five years so what do we want to do and suppose you're right let's say this is your mortgage and you live in this property for five years now and then you get that letter in or you get that call from the bank saying hey it's about time you know now you have 25 years left on that mortgage you know you can stay on or true we can knock your interest rate down let's say you're really anywhere from point two five to point one but if you're already at four and not sure if you can even you should Having really good credit for getting under three point five now so let's say they're going to come out ok half a point but then it moves you to a 15 year loan okay and so does it save you money and does it actually make sense to do it So let's run the numbers around this and see how it goes and when at the end of this you'll be able to see for yourself if it makes sense to know making the numbers make sense for you Make this move a refinance or is there a better approach Well let's say again we're at the five-year mark where the People that the average person refinances Well that's after five years and what they do we know about loans Well what we know about loans is what's on the front The loan is acceptable when the highest percentage of your payment goes directly to the bank and the interest and we can see that here on our loan with the first payment number date We send it 954 and only 288 of that actual principal ok we got 666 is pure interest to the bank ok so fast forward here ok we go to year five when we are when we do this refinance and let's go to the 60th month ok we track those numbers here and see if that makes sense okay, this month 60 ok and so on more life of the loan you can see the life of the loan interest here based on current numbers correct based on these numbers good over 30 years of this loan you will pay about one hundred forty three seven in right interest The bank is fine and after the fifth year you already have a payment of over thirty-eight thousand dollars that deserves attention ok so at this point we 're going to jump to 15 years refinancing I got that call from the bank and they're like ya know So let's go to fifteen because when you stand here it's like you have 25 years left to pay on that loan okay and you're going to pay another hundred thousand worth let's take you to fifteen and from there you know you'll be able to pay it off sooner and it's technically correct you know If you jump to 15 from where you are the remaining 25 years you jump to 15 yes you will pay it sooner but does that mean you will pay less overall interest is good so remember that number here and we'll write it down somewhere for you guys you know I don't know Remember it but it looks like we're going to pay a hundred and forty-three on this particular loan so we've already paid thirty-one and now come on with our refinance so let's trace our numbers here ok so we're going to bring those numbers into the data that way only at the end of this we'll be able to see a straight line The comparison so let's jump in there real quick so our initially balance on the asset is nearly two hundred thousand and the current balance here will be five years later, do you make the payments and again that's where I ate the bulk of the interest you've been paying So in percentage we got eight zero eight nine five after five years fuss 60 months yeah ok one eight zero eight nine five let's stick to that ok we're going to round this up to get our interest rate was easy 4% ok 4 bucks let's change that to 4% and let's make sure this isn't a currency let's change that that's right so they're 4% okay and our monthly payment was 954 83 ok and at the time of the refinancing we paid thirty-eight thousand and 184 dollars at 86 cents so three eight one eight four eight six three eight one eight eight four eighty-six kind a lot of interest we paid and so we go now we're going now basically in the air now we 're going to be doing a 15-year refinance good mortgage so the new balance on the new loan ok that's going to be right one hundred eighty eight thousand one hundred and five And the ninety dollars okay is all of this will be in this new balance the answer is ok because the bottom line is going to be some closing costs here are good and the bottom line is you know if these are going to be out-of-pocket or included in the loan, eh There are fees however, I mean the end result is there will be an assessment there will be document fees there will be ownership fees there will be all kinds of ongoing fees with the origination of any loan some of it will be unimportant fees so the bottom line is these are just fees you pay without necessarily adding value or adding The consumer benefits you but the fees just paid for that new loan are fine and usually you'll look anywhere from two to four percent of the amount borrowed as much as my estimation you know it's a football field for yourself two to four percent again depending on the lender so what are we going to use three percent You know keep it in the middle so we use three percent so we're going to take this eight zero eight nine five we're going to blow it up right here and then we're going to go once you get three percent so times the point zero three equals five thousand four hundred twenty-six dollars and 85 cents in closing cost of that I'm taking my grandmother so five four to six points eight five five four to six point eight five okay so our actual loan and let me actually create a class here a new loan so let's say we add these two Together mm-hmm c3 and c4 ok so your new loan is going to be about fine so you're looking at one hundred eighty three hundred twenty again this includes the fee for the new loan with the fee ok we were able to get 3.5% so that's why we wanted to do with this getting a lower interest rate than a course learning in year fifteen is I'll usually give you a little lower interest rate compared to a good thirty years so let's put those numbers into a calculator and see what our new loan looks like here so let's show that number so we have 186 Because we want to know the monthly payment here let me bring a new calculator here a new loan amount here one eight six three two one one eight six three two one point ok five I think that's right we have three five percent interest rate and again this requires Good credit but let's say you have that and so in what you know repayment periods give me fifteen years ok and you know some things right off the bat
bat here the first thing that just jumps off the paper and you need to be very aware of that when you refinance from thirty years to fifteen because you're shortening the time you're going to increase your payment because you know the bottom line is the only way to pay the principal is principal and so the only way I 'm going to pay it fifteen is to send them more money every month ok that's how you know from your free cash you need to send extra Now we're up to thirteen ninety- eight let's put that on our page ok they're the same at twenty five years now you're not fifteen I know it's going down you know ten x four years faster because we're sending an extra three hundred seventy seven dollars and fifteen cents on a secured mortgage, fixed payment every one month, and so on and so we 'll do it in 15 years and let's look at this loan again if you don't do it refinance again ok with this new loan you pay fifty three four three four nine eight the value of the interest okay so let's get on that there are 33 for 94.9 eight believe them and just check five three four nine four point nine eight that's good now we can't forget about that fee right yeah you know we can add the two interest numbers together to see how much we paid in interest But again you had to pay that fee, let's add those numbers ok and we'll come up with the sum the interest paid is good plus the fee accepted which is we'll put the formula in the formula equals some ok I just know you know using a little basic Excel arithmetic here equals some won 8+ c8 + c4 so beat 8 + c8 + c4 the parentheses equals ok so that's how much ok so what's really cool about this, we actually paid as little as you know by making this transition from and again because we were able to We say if half a point in interest and when again we didn't withdraw any money from this is a straight line we move from that thirty year mortgage that I entered into in 15 by doing this and even though we had to pay a fee and we went with the 3 fee % as far as your closing costs you know we're going to end up paying a total of 97,106 fees and interest is good compared to that let's look at the total time to pay the mortgage ok you already paid for five years paid you know you did five years here we're talking it's So I did five years as I spent five Q years in prison or something I kind of cut it out it's five years here is good and 15 years here so a total of 20 years ok so we were able to get rid of my mortgage now after 20 years instead of 30 seconds you can save yourself 10 years and you can Save yourself a little bit a big part of the change here you see 97106 in the total interest you know compare that to what it would be if you just got stuck and stayed with the original right if you just
stuck and stayed with the original and you made your payment for 10 extra years we actually pay 143739 let's get that There's one four three seven three nine one four three seven three nine ok so we can do a quick math here equals some well and we get B 10 minus C 10 ok what's great is that you were actually able to determine if you could have these Numbers well by doing this you will save yourself forty-six thousand six hundred and twenty dollars or wow you will be able to save yourself forty-six thousand one hundred thirty-two dollars in interest over the term of the loan what's great is that you actually managed to save you learning ten years instead of you .
Pay off this thirty-year mortgage Now you know you're only going to pay for
a total of twenty years and you've saved yourself forty-six thousand six hundred thirty-two dollars Does that make sense You know you're making this switch and go from a 30-year mortgage to a 15-year mortgage Doesn't actually save You're interested Yes it's OK as long as you now get a lower interest rate You could run into some problems here and there are several ways you can get there Problems number one Well there's just the reason you realize It's all good savings because you stayed in the property for the extra fifteen years is ok so if you're looking for this 15 year reference to really realize you're big savings seeing in the right box it's going to be there if you stay there for a term of that loan so if you're planning to move or if you're planning to say sell your property or upgrade your property or downgrade your rating but whatever but if you're not going to stay in this loan long term I'm not going to make all the savings well so let's say you're going to do that judgment but then you want to sell the next or two years well I've run into a couple of different issues Where the fees are good you paid to get this new loan may be more than acceptable the savings and interest you realize at work So also keep in mind we were able to get a properly discounted rate of interest if you weren't able to get that like let's say they're fine , we can get you in fifteen but on credit or whatever the case may be it should keep you aware of the four percent you were originally but we 'll take you to fifteen a lot of people would do that because it's back again on their minds Like I'm going to push this faster, so it's still an advantage me and we still look at the numbers and what we see is just adding half a point we took our interest in that we went from fifty three four okay and getting half that point back there was 15 years now we're back to 61 seven so We're talking about an additional eight thousand worth so when you look at our number here that number will be minus about eight thousand if you have to keep the same interest rate acceptable and the third thing of course is the fees okay you know that with that particular the lender and that's where the You need to shop a bit if you're looking to do this because you want all the graphics shown to you and you don't want any surprises that you don't want to show .
When it's time to close and all of a sudden they're like yes you know some because loan officers get back to you pay in certain ways between them commission based and the most unwanted fees or charges they can add to your reference add to your new loan more commission they are fine so you want making sure they are very frank with you about the fees but again we use 3% you know our average fees can be as high as six or even eight percent you know how much is borrowed depending on your lender so you know in a match with our three percent you know if We have over eight per cent which is ridiculous you know if you are but then again this is where if you don't have good credit you can go back and get you and you will get to pay a higher fee to do this kind of maneuver but again let's say you have 186 I'm sorry one eight zero eight nine five and let's say we had 8% in the fees is good which again would be very extreme now instead of the fifty-four hundred and the fees now it's all more like fourteen thousand so you know that that arrives using a range of three to eight the percent is there you know maybe 8% is a little bit aggressive you know look at the correct 6% charge which do you know you're going to see that good times point zero six ok you're looking at over 10 grams well you're looking at ten and eight if you're at six percent Closing cost you know we're going to close the cost fee again you know we're using 3% here but you have to be aware that if I 'm going to do this and they say yes you know the average fee is about 6% you have to put that into your account and so if we get 6% ok again and that's He would add money here and that would reduce the money ok here as far as the total savings increases life of the loan is acceptable but again if we can get those terms well if you have your balance in order and everything is fine and you go ahead and take this bigger payment he will pay this thing Sure sooner and you'll pay less money and the interest is about forty-six thousand forty-six in this particular scenario so I hope you find the value in this bottom training Is there other ways to pay this mortgage Is there a faster way to remove this mortgage you know Does it really make sense to keep your mortgage real estate for 30 years and instead of doing refinance instead of paying keep paying that fee and pay well because a lot of people another idea is that's why don't make this just a start this pay is ok why even bother with refinance and start making this payment Bigger just add this to the monthly principal payment per person a month so let's run the numbers on this really fast just to see if it makes sense to go ahead and send an extra 377 in the 30 years you probably know that's actually going to pay out a little faster so let's take a look at that here ok again let's put ourselves ok let's go back to that loan amount here ok we are at 4% and again look at getting this thing paid off .
15 years later, well let's go back to the 30-year mortgage here and let's start applying the principal and now that we're at month 60, again you're paying for this against five years ago to where we started and instead we're on ok we won't judge we will keep this same mortgage but start by sending the payment size for 15 year mortgage date this person you know for several reasons you might want to do this number one is you don't have to qualify for a new loan your balance may change a little bit you have cash flow and you have income but your balance has changed as you may not qualify for a mortgage for 15 years so you may not qualify but again you still want to get it faster ok then what we will do is and again you can use this calculator again if you don't have it downloaded yet you can get it think like a slash for the wealthy calculator you can have it exactly a calculator so you can keep going you know i'm doing this but let's say we start doing that extra pay and see if this actually helps us Pay loan a little faster so let's go three seven seven one five ok so in the sixty-first month we started sending and it showed three seven seven point one five ok and boom ok so in the month i see one now and we will add that for each and every month we will continue to pay seventy three And seventy- fifteen cents a month like a clock mechanism and we'll go ahead and add that and let's scroll down here and see when we pay that puppy okay, so we're pushing this thing and he's here too but we're going to pay it now in the second one hundred and forty-two months okay let's see we don't We can do the math on 242 divided by 12 for 12 months So look we paid for this for twenty years call it twenty years in two months So it took twenty years in two months for the mortgage to be paid off just fine So it took us two more months than it took to redo Financing 20 total years we've had five years of life a loan and then we've had 15 years on a new loan that we've paid off in 20 years by keeping the same loan you know keep the same loan and then just send a payment that starts in year five ok starting from year etc.

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Yesterday I'm starting to send in the extra 377 every month we've actually been able to pay it off in a little over twenty years so we can get to the same place okay but let's look at the total interest amount keeping the same loan we paid ninety- eight forty-seven well, which is definitely Much cheaper than you don't know send no extra and make payments for 30 years we've been paying this so we're paying way less than you know doing it oh my god we save almost $45,000 here's the interest of the life of the loan once you send it and again we're starting year 5 ok we did another way ok we paid 97 106 ok interest and fee s 97106 i mean we kind of split hairs here 97106 so we're talking about $1400 it's over $1400 interest payment if you just apply and start sending 377 15 in year 5 you know And because again it's just another option again if you cant qualify for the best rate interest or even just straight cant qualify for refinancing but you want to pay it early you can calculate what 15 your payment will be and then send this additional payment principle only on the mortgage real estate directly and get this thing pays off roughly the amount of time but you will choose a bit more I mean based on this analysis we are looking at about $1400 more than you would pay but again you don't have to deal with refinancing all of those qualifies different things you can still get to the same result Pay this amount .
In about 20 years using this approach and the bottom line does this require discipline Yes you know because it's the money that sits in your account and you choose to put in the foreclosure Are there other things you can do There are other ways that you can attack the loan but we'll talk about that in other videos You know we just wanted to show Does this save you the interest in moving from age 30 to 15 the answer is absolutely yes, ok but you can also get the same result and get the same result kind of savings just send 15 years pay and again starting from year 5 He started sending that extra that extra 15-year payment and we used you have five because back when it's usually refinancing to people around that year five so if you start in year five and then he starts sending that extra you're going to get roughly the same place in about the same time without having to to qualify for a new loan so I hope you've found value in this instructable and in this detail if you 've made sure to give it the same give it's a comment below and I'll see you in the next video [music] You

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