For those who want to refinance..

[Peruthopaniemundhi]

I know most people who bought primary residence this year or late last year bought it in an intention to refinance. Here is my assessment, please help with your thoughts..

1. Fed may increase rate one more time

https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2023/

2. rates will be unchanged for 2024 (election year)

3. Hoping economy will be on positive direction we can start to see rates lowered by mid 2025.

4. Rates won’t just fall but the decrease will be steady which means to go from 8.5 to 7.5 to 6.5 to 5.5 takes 2-3 years..

so now, here is the scenario, most folks bought their houses with interest rates from 5.5 to 6.5. 
 

on a $600k home, 10% down, loan amount is $540k at 6% interest rate.
 

Please see two amortization schedules 

1. from 2023 to 2027, at 6%

2. Refinanced amortization schedule at 5% interest rates in 2027.

if you compare 2027 original loan vs 2027 refinanced loan there is $400/month decrease in interest rates but original loan contribution towards principal is high. So, in theory one could save $4000 per year if interest rates go down by 1% but loan refinance costs will be 1% of loan which is $5000. Then what is the point of refinancing? 

Next year it may reduce to 4% and that will be it. Again refinance by paying 1% of the loan.
 

I feel paying to principal periodically will help to lower the money going towards interest.

instead of buying unwanted items, second car (mostly Tesla), solar panels, investment homes. I think paying towards principal is a profit when you compare it for a period of 5-7 years from now. Please correct me if I am wrong. 

Loan amount

Loan term30 years20 years15 years10 years

Interest rate

Loan start date

Selected month: February 2023

Optional: Make extra payments

By adding extra payment, you can pay off your loan faster and save on interest.

SUMMARY

Number of payments: 360

Monthly payment

$3,238

Total interest paid

$625,526

Total cost of loan

$1,165,526

Payoff date

Feb 2053

• Chart
• Schedule

Amortization schedule breakdown

This table lists how much principal and interest are paid in each scheduled mortgage payment.

First payment

 

Last payment

Feb 2053

Date	Principal	Interest	Remaining balance
2023
March	$537.57	$2,700.00	$539,462.43
April	$540.26	$2,697.31	$538,922.17
May	$542.96	$2,694.61	$538,379.20
June	$545.68	$2,691.90	$537,833.53
July	$548.41	$2,689.17	$537,285.12
August	$551.15	$2,686.43	$536,733.98
September	$553.90	$2,683.67	$536,180.07
October	$556.67	$2,680.90	$535,623.40
November	$559.46	$2,678.12	$535,063.94
December	$562.25	$2,675.32	$534,501.69
2024
January	$565.06	$2,672.51	$533,936.63
February	$567.89	$2,669.68	$533,368.74
March	$570.73	$2,666.84	$532,798.01
April	$573.58	$2,663.99	$532,224.42
May	$576.45	$2,661.12	$531,647.97
June	$579.33	$2,658.24	$531,068.64
July	$582.23	$2,655.34	$530,486.41
August	$585.14	$2,652.43	$529,901.27
September	$588.07	$2,649.51	$529,313.20
October	$591.01	$2,646.57	$528,722.20
November	$593.96	$2,643.61	$528,128.24
December	$596.93	$2,640.64	$527,531.30
2025
January	$599.92	$2,637.66	$526,931.39
February	$602.92	$2,634.66	$526,328.47
March	$605.93	$2,631.64	$525,722.54
April	$608.96	$2,628.61	$525,113.58
May	$612.00	$2,625.57	$524,501.58
June	$615.06	$2,622.51	$523,886.51
July	$618.14	$2,619.43	$523,268.37
August	$621.23	$2,616.34	$522,647.14
September	$624.34	$2,613.24	$522,022.80
October	$627.46	$2,610.11	$521,395.34
November	$630.60	$2,606.98	$520,764.75
December	$633.75	$2,603.82	$520,131.00
2026
January	$636.92	$2,600.65	$519,494.08
February	$640.10	$2,597.47	$518,853.98
March	$643.30	$2,594.27	$518,210.68
April	$646.52	$2,591.05	$517,564.16
May	$649.75	$2,587.82	$516,914.40
June	$653.00	$2,584.57	$516,261.40
July	$656.27	$2,581.31	$515,605.14
August	$659.55	$2,578.03	$514,945.59
September	$662.84	$2,574.73	$514,282.75
October	$666.16	$2,571.41	$513,616.59
November	$669.49	$2,568.08	$512,947.10
December	$672.84	$2,564.74	$512,274.26

2027
January	$676.20	$2,561.37	$511,598.06
February	$679.58	$2,557.99	$510,918.47
March	$682.98	$2,554.59	$510,235.49
April	$686.40	$2,551.18	$509,549.10
May	$689.83	$2,547.75	$508,859.27
June	$693.28	$2,544.30	$508,166.00
July	$696.74	$2,540.83	$507,469.25
August	$700.23	$2,537.35	$506,769.03
September	$703.73	$2,533.85	$506,065.30
October	$707.25	$2,530.33	$505,358.05
November	$710.78	$2,526.79	$504,647.27
December	$714.34	$2,523.24	$503,932.93

refinanced at 5% Date	Principal	Interest	Remaining balance
2027
February	$615.52	$2,134.47	$511,658.48
March	$618.09	$2,131.91	$511,040.39
April	$620.66	$2,129.33	$510,419.73
May	$623.25	$2,126.75	$509,796.48
June	$625.85	$2,124.15	$509,170.63
July	$628.45	$2,121.54	$508,542.18
August	$631.07	$2,118.93	$507,911.11
September	$633.70	$2,116.30	$507,277.41
October	$636.34	$2,113.66	$506,641.06
November	$638.99	$2,111.00	$506,002.07
December	$641.66	$2,108.34	$505,360.42
2028
January	$644.33	$2,105.67	$504,716.09
February	$647.01	$2,102.98	$504,069.07
March	$649.71	$2,100.29	$503,419.36
April	$652.42	$2,097.58	$502,766.95
May	$655.14	$2,094.86	$502,111.81
June	$657.87	$2,092.13	$501,453.95
July	$660.61	$2,089.39	$500,793.34
August	$663.36	$2,086.64	$500,129.98
September	$666.12	$2,083.87	$499,463.86
October	$668.90	$2,081.10	$498,794.96
November	$671.69	$2,078.31	$498,123.27
December	$674.48	$2,075.51	$497,448.79

[shaktimaan]

Prospective buyers, plan your purchase and make sure you can afford it with a single paycheck. Anything can happen in life and your spouse might have to stop working for whatever reason

Enjoy life and don't trap yourself

[Thokkalee]

Niku chala opika undi bro… 

ippatlo refinancing cheyyadam kudaradu.. at least in the next 5 years.. even if the interest rates go low, they won’t go to prepandemic levels.. they may go to 5% or so in the next 5 years… if you consider closing costs and other expenses, it has to be at least 2% below your current interest rates for it to break even.. 

trump vasthe interest rates thaggisthaadu.. but if trump is contesting, most people will vote for Dems even if they don’t like the Dems choice of Biden… many ppl prefer the calmness of Biden admin than the chaos of Trump admin 

[Peruthopaniemundhi]

1 hour ago, Thokkalee said:

Niku chala opika undi bro… 

ippatlo refinancing cheyyadam kudaradu.. at least in the next 5 years.. even if the interest rates go low, they won’t go to prepandemic levels.. they may go to 5% or so in the next 5 years… if you consider closing costs and other expenses, it has to be at least 2% below your current interest rates for it to break even.. 

trump vasthe interest rates thaggisthaadu.. but if trump is contesting, most people will vote for Dems even if they don’t like the Dems choice of Biden… many ppl prefer the calmness of Biden admin than the chaos of Trump admin 

True.. na intention of post kudha same, the main reason why people are buying house regardless of investment homes or primary is hoping interest rates will come down in a year.

Which is not true. 
 

nobody is realizing that we need wait for 5-6 years to get pandemic rates for (4%). Andukae advising most not waste money on Tesla instead pay down towards principal. Clear the debt.

[Paamu]

Own house anedi samanyudi kala. A kala ni inka kala gaane unchestunnaru e laddu lo politics tho. Institutions are buying the inventory and  controlling the price. Asalu a interest rates 1-2% cheste reaction ilaane untadi ani telsu kada. 

[Hitman]

1 minute ago, Paamu said:

Own house anedi samanyudi kala. A kala ni inka kala gaane unchestunnaru e laddu lo politics tho. Institutions are buying the inventory and  controlling the price. Asalu a interest rates 1-2% cheste reaction ilaane untadi ani telsu kada. 

This is correct. Last week in Pembroke Pines, FL seen a property in pretty bad condition but photos doesn’t show all the shitty things. For a 450k listing I have calculated it needs 75 k immediate improvements as previous owner did ugly partition. But the house was sold to 20k premium by a corporation from Denver. కలికాలమ్ 

[Maggavale]

4 minutes ago, Paamu said:

Own house anedi samanyudi kala. A kala ni inka kala gaane unchestunnaru e laddu lo politics tho. Institutions are buying the inventory and  controlling the price. Asalu a interest rates 1-2% cheste reaction ilaane untadi ani telsu kada. 

@Sonu_Patel gurinche na ? 

[Paamu]

1 minute ago, Maggavale said:

@Sonu_Patel gurinche na ? 

Sonu got money - he will buy eventually. In general single paychecks ki aythe 150k unna kastam aypotundi. Pay check to pay check.

[Maggavale]

Just now, Paamu said:

Sonu got money - he will buy eventually. In general single paychecks ki aythe 150k unna kastam aypotundi. Pay check to pay check.

Yes. Sonu already million mansion lo undi troll posts anipisthayi renters meeda 😀. @RPG_Reloaded anna alter ego anukunta

[Jaggadonga]

3 hours ago, Peruthopaniemundhi said:

I know most people who bought primary residence this year or late last year bought it in an intention to refinance. Here is my assessment, please help with your thoughts..

1. Fed may increase rate one more time

https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2023/

2. rates will be unchanged for 2024 (election year)

3. Hoping economy will be on positive direction we can start to see rates lowered by mid 2025.

4. Rates won’t just fall but the decrease will be steady which means to go from 8.5 to 7.5 to 6.5 to 5.5 takes 2-3 years..

so now, here is the scenario, most folks bought their houses with interest rates from 5.5 to 6.5. 
 

on a $600k home, 10% down, loan amount is $540k at 6% interest rate.
 

Please see two amortization schedules 

1. from 2023 to 2027, at 6%

2. Refinanced amortization schedule at 5% interest rates in 2027.

if you compare 2027 original loan vs 2027 refinanced loan there is $400/month decrease in interest rates but original loan contribution towards principal is high. So, in theory one could save $4000 per year if interest rates go down by 1% but loan refinance costs will be 1% of loan which is $5000. Then what is the point of refinancing? 

Next year it may reduce to 4% and that will be it. Again refinance by paying 1% of the loan.
 

I feel paying to principal periodically will help to lower the money going towards interest.

instead of buying unwanted items, second car (mostly Tesla), solar panels, investment homes. I think paying towards principal is a profit when you compare it for a period of 5-7 years from now. Please correct me if I am wrong. 

 

Loan amount

 

 

Loan term30 years20 years15 years10 years

Interest rate

 

Loan start date

Selected month: February 2023

 

Optional: Make extra payments

By adding extra payment, you can pay off your loan faster and save on interest.

SUMMARY

Number of payments: 360

Monthly payment

$3,238

Total interest paid

$625,526

Total cost of loan

$1,165,526

Payoff date

Feb 2053

• Chart
• Schedule

Amortization schedule breakdown

This table lists how much principal and interest are paid in each scheduled mortgage payment.

First payment

 

 

Last payment

Feb 2053

Date	Principal	Interest	Remaining balance
2023
March	$537.57	$2,700.00	$539,462.43
April	$540.26	$2,697.31	$538,922.17
May	$542.96	$2,694.61	$538,379.20
June	$545.68	$2,691.90	$537,833.53
July	$548.41	$2,689.17	$537,285.12
August	$551.15	$2,686.43	$536,733.98
September	$553.90	$2,683.67	$536,180.07
October	$556.67	$2,680.90	$535,623.40
November	$559.46	$2,678.12	$535,063.94
December	$562.25	$2,675.32	$534,501.69
2024
January	$565.06	$2,672.51	$533,936.63
February	$567.89	$2,669.68	$533,368.74
March	$570.73	$2,666.84	$532,798.01
April	$573.58	$2,663.99	$532,224.42
May	$576.45	$2,661.12	$531,647.97
June	$579.33	$2,658.24	$531,068.64
July	$582.23	$2,655.34	$530,486.41
August	$585.14	$2,652.43	$529,901.27
September	$588.07	$2,649.51	$529,313.20
October	$591.01	$2,646.57	$528,722.20
November	$593.96	$2,643.61	$528,128.24
December	$596.93	$2,640.64	$527,531.30
2025
January	$599.92	$2,637.66	$526,931.39
February	$602.92	$2,634.66	$526,328.47
March	$605.93	$2,631.64	$525,722.54
April	$608.96	$2,628.61	$525,113.58
May	$612.00	$2,625.57	$524,501.58
June	$615.06	$2,622.51	$523,886.51
July	$618.14	$2,619.43	$523,268.37
August	$621.23	$2,616.34	$522,647.14
September	$624.34	$2,613.24	$522,022.80
October	$627.46	$2,610.11	$521,395.34
November	$630.60	$2,606.98	$520,764.75
December	$633.75	$2,603.82	$520,131.00
2026
January	$636.92	$2,600.65	$519,494.08
February	$640.10	$2,597.47	$518,853.98
March	$643.30	$2,594.27	$518,210.68
April	$646.52	$2,591.05	$517,564.16
May	$649.75	$2,587.82	$516,914.40
June	$653.00	$2,584.57	$516,261.40
July	$656.27	$2,581.31	$515,605.14
August	$659.55	$2,578.03	$514,945.59
September	$662.84	$2,574.73	$514,282.75
October	$666.16	$2,571.41	$513,616.59
November	$669.49	$2,568.08	$512,947.10
December	$672.84	$2,564.74	$512,274.26

2027
January	$676.20	$2,561.37	$511,598.06
February	$679.58	$2,557.99	$510,918.47
March	$682.98	$2,554.59	$510,235.49
April	$686.40	$2,551.18	$509,549.10
May	$689.83	$2,547.75	$508,859.27
June	$693.28	$2,544.30	$508,166.00
July	$696.74	$2,540.83	$507,469.25
August	$700.23	$2,537.35	$506,769.03
September	$703.73	$2,533.85	$506,065.30
October	$707.25	$2,530.33	$505,358.05
November	$710.78	$2,526.79	$504,647.27
December	$714.34	$2,523.24	$503,932.93

refinanced at 5% Date	Principal	Interest	Remaining balance
2027
February	$615.52	$2,134.47	$511,658.48
March	$618.09	$2,131.91	$511,040.39
April	$620.66	$2,129.33	$510,419.73
May	$623.25	$2,126.75	$509,796.48
June	$625.85	$2,124.15	$509,170.63
July	$628.45	$2,121.54	$508,542.18
August	$631.07	$2,118.93	$507,911.11
September	$633.70	$2,116.30	$507,277.41
October	$636.34	$2,113.66	$506,641.06
November	$638.99	$2,111.00	$506,002.07
December	$641.66	$2,108.34	$505,360.42
2028
January	$644.33	$2,105.67	$504,716.09
February	$647.01	$2,102.98	$504,069.07
March	$649.71	$2,100.29	$503,419.36
April	$652.42	$2,097.58	$502,766.95
May	$655.14	$2,094.86	$502,111.81
June	$657.87	$2,092.13	$501,453.95
July	$660.61	$2,089.39	$500,793.34
August	$663.36	$2,086.64	$500,129.98
September	$666.12	$2,083.87	$499,463.86
October	$668.90	$2,081.10	$498,794.96
November	$671.69	$2,078.31	$498,123.27
December	$674.48	$2,075.51	$497,448.79

Nice post. If I pay $1000 towards my principal, will my monthly emi go down? I see my overall principal got reduced but not the emo and the number of payments.

[Ravi860]

20 minutes ago, Jaggadonga said:

Nice post. If I pay $1000 towards my principal, will my monthly emi go down? I see my overall principal got reduced but not the emo and the number of payments.

Emi won’t because of current mortgage loan, you need to do either recast or refinance 

[rako]

3 hours ago, Peruthopaniemundhi said:

I know most people who bought primary residence this year or late last year bought it in an intention to refinance. Here is my assessment, please help with your thoughts..

1. Fed may increase rate one more time

https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2023/

2. rates will be unchanged for 2024 (election year)

3. Hoping economy will be on positive direction we can start to see rates lowered by mid 2025.

4. Rates won’t just fall but the decrease will be steady which means to go from 8.5 to 7.5 to 6.5 to 5.5 takes 2-3 years..

so now, here is the scenario, most folks bought their houses with interest rates from 5.5 to 6.5. 
 

on a $600k home, 10% down, loan amount is $540k at 6% interest rate.
 

Please see two amortization schedules 

1. from 2023 to 2027, at 6%

2. Refinanced amortization schedule at 5% interest rates in 2027.

if you compare 2027 original loan vs 2027 refinanced loan there is $400/month decrease in interest rates but original loan contribution towards principal is high. So, in theory one could save $4000 per year if interest rates go down by 1% but loan refinance costs will be 1% of loan which is $5000. Then what is the point of refinancing? 

Next year it may reduce to 4% and that will be it. Again refinance by paying 1% of the loan.
 

I feel paying to principal periodically will help to lower the money going towards interest.

instead of buying unwanted items, second car (mostly Tesla), solar panels, investment homes. I think paying towards principal is a profit when you compare it for a period of 5-7 years from now. Please correct me if I am wrong. 

 

Loan amount

 

 

Loan term30 years20 years15 years10 years

Interest rate

 

Loan start date

Selected month: February 2023

 

Optional: Make extra payments

By adding extra payment, you can pay off your loan faster and save on interest.

SUMMARY

Number of payments: 360

Monthly payment

$3,238

Total interest paid

$625,526

Total cost of loan

$1,165,526

Payoff date

Feb 2053

• Chart
• Schedule

Amortization schedule breakdown

This table lists how much principal and interest are paid in each scheduled mortgage payment.

First payment

 

 

Last payment

Feb 2053

Date	Principal	Interest	Remaining balance
2023
March	$537.57	$2,700.00	$539,462.43
April	$540.26	$2,697.31	$538,922.17
May	$542.96	$2,694.61	$538,379.20
June	$545.68	$2,691.90	$537,833.53
July	$548.41	$2,689.17	$537,285.12
August	$551.15	$2,686.43	$536,733.98
September	$553.90	$2,683.67	$536,180.07
October	$556.67	$2,680.90	$535,623.40
November	$559.46	$2,678.12	$535,063.94
December	$562.25	$2,675.32	$534,501.69
2024
January	$565.06	$2,672.51	$533,936.63
February	$567.89	$2,669.68	$533,368.74
March	$570.73	$2,666.84	$532,798.01
April	$573.58	$2,663.99	$532,224.42
May	$576.45	$2,661.12	$531,647.97
June	$579.33	$2,658.24	$531,068.64
July	$582.23	$2,655.34	$530,486.41
August	$585.14	$2,652.43	$529,901.27
September	$588.07	$2,649.51	$529,313.20
October	$591.01	$2,646.57	$528,722.20
November	$593.96	$2,643.61	$528,128.24
December	$596.93	$2,640.64	$527,531.30
2025
January	$599.92	$2,637.66	$526,931.39
February	$602.92	$2,634.66	$526,328.47
March	$605.93	$2,631.64	$525,722.54
April	$608.96	$2,628.61	$525,113.58
May	$612.00	$2,625.57	$524,501.58
June	$615.06	$2,622.51	$523,886.51
July	$618.14	$2,619.43	$523,268.37
August	$621.23	$2,616.34	$522,647.14
September	$624.34	$2,613.24	$522,022.80
October	$627.46	$2,610.11	$521,395.34
November	$630.60	$2,606.98	$520,764.75
December	$633.75	$2,603.82	$520,131.00
2026
January	$636.92	$2,600.65	$519,494.08
February	$640.10	$2,597.47	$518,853.98
March	$643.30	$2,594.27	$518,210.68
April	$646.52	$2,591.05	$517,564.16
May	$649.75	$2,587.82	$516,914.40
June	$653.00	$2,584.57	$516,261.40
July	$656.27	$2,581.31	$515,605.14
August	$659.55	$2,578.03	$514,945.59
September	$662.84	$2,574.73	$514,282.75
October	$666.16	$2,571.41	$513,616.59
November	$669.49	$2,568.08	$512,947.10
December	$672.84	$2,564.74	$512,274.26

2027
January	$676.20	$2,561.37	$511,598.06
February	$679.58	$2,557.99	$510,918.47
March	$682.98	$2,554.59	$510,235.49
April	$686.40	$2,551.18	$509,549.10
May	$689.83	$2,547.75	$508,859.27
June	$693.28	$2,544.30	$508,166.00
July	$696.74	$2,540.83	$507,469.25
August	$700.23	$2,537.35	$506,769.03
September	$703.73	$2,533.85	$506,065.30
October	$707.25	$2,530.33	$505,358.05
November	$710.78	$2,526.79	$504,647.27
December	$714.34	$2,523.24	$503,932.93

refinanced at 5% Date	Principal	Interest	Remaining balance
2027
February	$615.52	$2,134.47	$511,658.48
March	$618.09	$2,131.91	$511,040.39
April	$620.66	$2,129.33	$510,419.73
May	$623.25	$2,126.75	$509,796.48
June	$625.85	$2,124.15	$509,170.63
July	$628.45	$2,121.54	$508,542.18
August	$631.07	$2,118.93	$507,911.11
September	$633.70	$2,116.30	$507,277.41
October	$636.34	$2,113.66	$506,641.06
November	$638.99	$2,111.00	$506,002.07
December	$641.66	$2,108.34	$505,360.42
2028
January	$644.33	$2,105.67	$504,716.09
February	$647.01	$2,102.98	$504,069.07
March	$649.71	$2,100.29	$503,419.36
April	$652.42	$2,097.58	$502,766.95
May	$655.14	$2,094.86	$502,111.81
June	$657.87	$2,092.13	$501,453.95
July	$660.61	$2,089.39	$500,793.34
August	$663.36	$2,086.64	$500,129.98
September	$666.12	$2,083.87	$499,463.86
October	$668.90	$2,081.10	$498,794.96
November	$671.69	$2,078.31	$498,123.27
December	$674.48	$2,075.51	$497,448.79

GP

Anduke nenu 50% down payment done..

[Peruthopaniemundhi]

21 minutes ago, rako said:

GP

Anduke nenu 50% down payment done..

Great job bro.. money untayi kani cheyadaniki guts kavali..

[Vaaaampire]

Our mindset: we want reward but we dont want to take risk. Not only that we will try to brainwash the candidates who are willing to take risk with our analysis.

[Jaggadonga]

45 minutes ago, Ravi860 said:

Emi won’t because of current mortgage loan, you need to do either recast or refinance 

What's recast? If I don't refinance or recast, then will I end up paying more in 30 years?