Getting Personal
Points?
Okay, I've learned the hard way that I can't stay in a hotel without a good Internet connection just to save a few bucks, It isn't worth the time and aggravation. Anyway, since I couldn't post yesterday, here's an extra one for today.
Question: How do I see whether it's a better deal for us to refinance, say, at 5.8% with closing costs of, say $5,000 or to go with an offer with no closing costs but at 6.5%? It has to do with time to recoup the closing cost expense and time we plan to be in the home...? Are there amortization schedules (is that what you call them?) that can be run to show me the comparisons? Thanks much for any help! Johan, Ocoee, FL
Answer: Yes, there are a number of calculators on the web. For instance, you can go to www.dinkytown.net. In its mortgage calculation section there is a "mortgage points calculator." This way you can weigh the trade-offs. In general, the big advantage of a no-points mortgage is that it's cheaper if you end up refinancing at a lower rate within a reasonable period of time (or end up moving within a few years). The advantage of paying a point or two is that you buy down the interest rate, which can pay off over the long run. The mortgage calculators will give you concrete numbers to work with.
Looking for guidance on your personal finances? I'm taking your questions and answering one here each day. Just click on the "Ask a question" link to tell me what's on your mind.
Chris Farrell Marketplace Money personal finance guru
Categories
- Banking
- Books
- Budgeting
- Charitable giving
- Credit cards
- Credit report, credit score
- Debt
- Dollar exchange rate
- Economy
- Estate planning
- Financial planner
- Housing
- Insurance
- Investing
- Stocks
- Kids and money
- Mutual funds
- Paying for college
- Retirement
- Retirement savings
- 401k
- Bonds
- IRAs
- Money markets
- Mutual funds
- Savings
- Scams
- Social Security
- Taxes
Hot Topic
Latest Posts
Archives
| S | M | T | W | T | F | S |
|---|---|---|---|---|---|---|
| 1 | 2 | 3 | 4 | |||
| 5 | 6 | 7 | 8 | 9 | 10 | 11 |
| 12 | 13 | 14 | 15 | 16 | 17 | 18 |
| 19 | 20 | 21 | 22 | 23 | 24 | 25 |
| 26 | 27 | 28 | 29 | 30 | 31 |
sponsor
Latest Comments
- Low rates on savings (3)
- Chris Farrell wrote: Its amazing, isn't it? It's also a sign of how crazy and scared the financial world is right now. In... [read]
- Richard wrote: Online savings accounts are doing a bit better. Countrywide Bank for example is offering 3.4%, a tie... [read]
- Investing during a Great Depression (2)
- Erin wrote: This looks like a helpful article but it's really hard to read long sections of italicized text onli... [read]
- Chris Farrell wrote: Thanks, I'll change it. Chris ... [read]
- CDs and the FDIC (2)
- John Fuld wrote: Chris, I have to add that even though FDIC may not guarantee the interest on CD (I can't find it on ... [read]
- Chris Farrell wrote: Yes, you're right and as I understand it honoring the terms is standard industry practice. But just ... [read]
- Money market mutual funds (2)
- Mark Ivey wrote: What about money that goes in after Sept. 19? I take it this would be a bad time to switch my money... [read]
- D. Chin wrote: I also have the same concern; To preserve my assets during the current crisis, I just transferred al... [read]
- Retirement savings and debt (2)
- Handyman wrote: I suggest that you take a look at the current return on I-bonds. Because of recent changes in Treas... [read]
- Eric wrote: I don't understand the strategy of not paying down a mortgage in order to invest that money elsewher... [read]
sponsor
