jonesin39
Joined: 22 Feb 2010
Posts: 1
Location: MA
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| Posted: Mon Feb 22, 2010 12:54 am Post subject: should i refinance my 1st mortgage or pay my 2nd one down? |
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I currently have an 80/20 mortgage on my house. I called my current lender (BOA)and asked about the Making Homes Affordable program to find out about refinancing the loan. I plan to sell the house as soon as is humanly possible, when market prices rebound enough for me to at least break even and get out - I am hoping for about 2-3 years from now.
Currently the first mortgage balance is $246,510 at 6.125% rate and interest only for the next 6 years.
The current payment on this loan is $1265/mo.
The second lein has a balance of $45,456.62 at 9.625% rate and is also interest only for the next 6 years.
The current payment on this loan is $372.97/mo.
BOA ran the numbers and came back to me with a 30yr fixed paying P&I on the first mortgage at 5.5% interest.
The new loan balance would be $250,000 because they are including the $3831 in closing costs to refinance, plus I will have to pay a $400 application fee.
The new proposed payment would be $1419.47/mo.
So my payment would go up, however I'd be paying less interest a month and also paying some principal. My mortgage balance would also increase by almost $4000 and I would have to come up with that $400 application fee.
Now on to my question:
Is it worth it for me to refinance the first mortgage under this program or would I be better off just paying down my second lein? I am having a hard time trying to run the numbers to see if this makes sense or not. I have no problem paying the higher payment.
I dont know if this is a good idea since I plan to only stay in the house for a few more years and will incur the closing cost and application fee. |
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