Should I refinance a 20 year adjustable, 2%, adjust in 2018, 3 years into loan for a 20 year fixed 4.2% savings of over $300 per month?
Answers | 3
Your numbers are a little confusing. You state you're 3 years into a 20 year adjustable loan at 2%, and want to refinance into a 20 year loan fixed at 4.2%, SAVING $300/mn? That's not possible. Extending the loan term by 3 years won't offset the significant rise in your interest rate. Let's say your initial loan size was 500K (yes, I understand it's likely far less). The P&I at 2% for 20 years is $2529. If, for the sake of this discussion, you now owe $475K, a new 20 year loan at 4.2% (which is NOT a good rate for a 20 year loan, barring serious credit difficulties) would be $2928. so almost exactly $400 MORE than your current payment.
If you have more details, love to hear them. I write loans nationally, and you're welcome to contact me through my profile. Thanks, Ted