Is Refinancing Your Mortgage Worth It?

Jimmy is in North Carolina hi Jimmy

welcome to the Dave Ramsey show thanks

for taking the call Dave we've got a

question regarding our mortgage right

now we're on a 30-year fixed our

payments about $1,100 a month with a

4.5% interest fee and we're on the PMI

right now so we want to get it

refinanced I'm looking at either a 15

year at 3.125%

or a 10 year at two point nine nine

percent to ten year payments 1,800 and

the ten or fifteen is 1350 I know that

there's some kind of formula that I'm

missing on how quick closing costs and

prepaids we've gotten a quote on the

closing costs not the prepay yeah for

grant Oh for the closing cost is about

2900 okay and what's your loan balance

167 right now okay so every 1% that you

save is sixteen hundred and seventy

dollars a year and you're saving about

one and a half percent and so that's

gonna put you to about $2,500 a year

$2,400 a year in there okay in interest

savings regardless of what your payment

is okay so if you got a year if you got

if you got a three percent loan 2.99 and

you got a four and a half that's a one

and a half spread times your loan amount

it is gonna put you in about twenty four

hundred twenty five hundred dollars if

your closing cost is four thousand

dollars it takes you less than two years

to break even and everything after

that's gravy on the biscuit in savings

you understand sure okay and you'll have

a higher payment at a at a ten year than

you will a fifteen but if the interest

rate is the same the savings is exactly

the same regardless of the payment it

doesn't have you in the show but it's

yeah what's your real savings it's not

the principal reduction your real

savings just the interest savings

now the other savings on top of that is

the PMI what are you paying in PMI

yeah it's only 72 dollars a month which

is it ain't nothing but it's not as high

as it could be okay all right but that's

another 1,200 or another thousand

dollars a year off roughly yes not 950

bucks a year okay so that puts us at

2400 our 2500 plus 900 and so we're at

34 33 $3,400 and your closing costs

you're gonna break even in slightly over

a year by being rid of the PMI and by

being rid of this so I love the 10-year

plan that makes sense yes makes it

thrown on it hey I also I just want to

thank you over the last year we've

really dialed in and been listening to

you we've been able to pay off all our

debt get our six-month emergency fund

have a another beautiful baby and you

know be sitting pretty with the house so

your your podcast has gone a long way in

our lives well thank you man I'm proud

of you very well done very well done

sounds like you got your act together

things are happening in the right

direction very very cool