What's the MM decision here?

[katieb4tom]

I have a 5% 30 year mortgage with a balance of $102K. We pay an extra $120 every month, reducing the term to 21 years if we keep this up. We did not put 20% down and have excellent credit.

We are not 100% but there is a strong possibility that we will sell in 4-5 years when our baby starts school to move to a better district.

I have gotten refi quotes of 3.75 to a 20 year with $4500 in closing costs.

Would you refinance in this situation? I am leaning toward no and to just continue paying extra to the principal, but with all the refi talk, I wonder if I shouldn't do it too.

[ijack]

what is your current payment? and what is your house worth compared to what you owe?

[Deleted]

Do you have an idea on what your closing costs would be?

[katieb4tom]

Jan 11, 2013 12:29:45 GMT -5 Mrs.flang said:

If your payment drops by $100 or so, you will break even on closing costs before you hit the 4 year mark, and will make out better in the end (if my math is correct).

If it wouldn't reduce your payment by more than that, then it would not be MM to refinance.

To go to a 20 year (another 30 doesn't do anything for us) the required minimum payment actually goes up by about $75. Since we currently overpay, if we stopped doing that it would go down by about $40.

We can afford the payments we make easily, so this would just be to save on interest in the four years (or more if we stay) that we'd be there.

[katieb4tom]

Jan 11, 2013 12:26:01 GMT -5 ijack said:

what is your current payment? and what is your house worth compared to what you owe?

Current payment: $591

I am very unsure of my house's current value. Zillow does not list one bathroom and we have greatly improved the back-yard from what it was. If I go by zillow, then we are at break-even, the house is worth about what we owe.

[ijack]

what is the market like in your area? are you certain that you're going to move in that time frame (or be able to move)? Also, that seems like a kind of high rate for a 20yr loan.