I'm in a dilemma, I'm looking to refi my mortgage loan. I owe roughly $51k and my current interest is 5.75% with a monthly payment not including insurance is around $330 for a 30 yr loan. We had been paying double payments for a while but stopped due to paying off something else. This is our only debt by the way!

I was looking into a 15yr mortgage at 3.375% on a $51k loan which would give me a new payment of $361 and closing cost would be around $1800. I have figured it would take me about 2 years to breakeven on the closing cost and regardless I don't see us paying it off in 2 years.

But my question is would it be worth it going through with the refi even if I still plan to make double or even triple payments every month?? Or would the extra payments negate the refi?

Thanks for your help!

If you are planning on staying in the house, I'd totally do it. There is the 1800 in closing costs (which I'm not sure if you are rolling into the loan or not). Unless I'm misunderstanding, you are comparing making double payments of 330 (660) versus single payments of 361 for completing the mortage in roughly same amount of time.

Given the low balance of the loan, I would go with a slightly higher interest rate on a no-closing-cost loan. Those closing costs are equivalent to paying about 3 points on the loan.

I just closed last week on a $250,000 refinance at 15 years/3.5% fixed with no closing costs.

When we got our mortgage in the early 90s our rate was about 9.5%. This was a good rate at the time. We made aggressive payments and chiseled the balance down quickly. By about 1996 rates had gone way down. We contemplated refinancing. The breakeven point was about 3 years I think. But we also realized that we could pay off the whole thing in about 2 years if we tried really hard. That's what we did. It might have made perfect sense to refinance but in the end we saved a lot by skipping it and just paying quickly.

In your case I really think it is a close call. I like the suggestion of looking for a zero closing cost refi even if the rate is a little higher. You would really have to run the numbers. If you have other savings you could skip the refi, pay aggressively for another 2-3 years and get the balance way down then pay it off with savings before rebuilding savings. If you don't have any other savings then I might do the refi.

It seems like a good deal in some ways. But you are on a path to pay it off in 7 years or so. I'm not sure you need the refi.