“Five years ago, you bought a house for $151,000, with a down payment of $30,000, which meant you took out a loan for $121,000. Your interest rate was 5.75% fixed. You would like to pay more on your loan.” In order to pay off the stated loan in 20 years instead of 25 years, I would have to pay roughly $1075.40 per month instead of the $917.25 payment I was making previously. This does not seem like the best idea since I would not have enough money left over each month from my salary to have a good quality of life. I would have less than $100 per month (roughly $20 per week) to live off of. There is nothing reasonable about that at all.
Now, in order for me to pay off this loan in 20 years and possibly at a lower cost (so that I may have a bit more spending money every month) I would want to refinance my loan in order to lower my interest rate from 5.45%. In order to do that, I need to evaluate my credit score. Currently, my credit score is in good condition which will definitely work in my favor. If I was to refinance my loan at a 2.45% interest rate, instead of my current rate of 5.45%. At this new rate, my current monthly payments would drop down to roughly $796. That’s roughly $200 I would be saving each month off of my payments. Though the idea of saving $200 dollars a month is great, in order for me to refinance my loan, I would already have to shell out over $2,000 upfront just to reap the benefits of saving $200 per month. In that regard, I would say that refinancing is not a good idea for me. Instead, I would break my monthly payments up onto biweekly ones in order to lessen the burden of money on myself.