We are thinking of refinanceing our farm,how do you deceide if its worth doing? we are paying 8.25% and 9.50% I was told we maybe able to get 7.0%on both combined but we would pay points and closing costs. I am so confused on how this would save in the long run...Thanks

-- renee oneill{md.} (oneillsr@home.com), January 23, 2001

Answers

renee,

If you have to pay points, you need to calculate that amount and then how much it will cost you if its rolled into the refinance and the term. Generally, a refinance with a fee and no points, resulting in a lowering of 1 to 2 percent reduction is prefered.

-- Jay Blair in N. AL (jayblair678@yahoo.com), January 23, 2001.

I am doing that right now and I found out that in the long run and even though I have to pay points I will be saving 20,000 by refinancing at the rate of 6.875 instead of the 8.5 we are paying. Good Luck

-- Evelyn B. (evandjim@weserv.net), January 23, 2001.

Usually when you refinance they will just include the refinance charges in the new loan. On a loan of about 50,000 you will have refinance charges total of about 3500 dollars. If you are going to pay the loan off over the long term it usually saves big bucks. If you plan to pay it off quickly it probably does not makes sence. You will have to look at the total pay back both as you have it financed now and what the total pay back will be if you refinance.

-- David (bluewaterfarm@mindspring.com), January 23, 2001.

It makes more sense to pay an additional sum of money each month towards the principal on your loan, you would not believe the difference this will make on interest paid on the loan, we cut 5 years off a 15 year loan paying only 100 extra dollars a month!!! Your loan company can figure out an amount you could pay to reduce your interest appropriately. Don't refinance, it's a trap they want you take!!!

-- Annie Miller in SE OH (annie@1st.net), January 28, 2001.

A 2.5% drop in interest rates is significant enough to look into. Subtract the new payment from the old and see how long it will take to pay the closing costs with the difference. Example, $100 dollar per month difference in payments, $1000 closing costs, equals 10 months payback. At that point you can apply extra money ffor early payback without adversley affecting your current budget. Early payment on loans is not always advantageous. If you can invest your money and get a guaranteed return greater than your loan rate, you may be better off paying the loan as scheduled and using your extra money to earn more for you.

-- ray s. (mmoetc@yahoo.com), January 29, 2001.

I agree with Ray. 2-3 % is significant, especially if you plan to remain in the home for a few years. Do the math over the life of the loan, not your hope to pay it off by date, but the length of the loan and you will see the payoff.

If your goal is to pay off the house and own it,are nervous about investments, and worry about it like a dog with a bone, make extra payments too. We did both refinancing (dropped 3%) and paid extra and it was pretty painless. Owning our own home gives us great satisfaction.

-- Anne (HT@HM.com), January 29, 2001.

yes,we would like to refinaneing our farm and a double wide trail,so are insents rate wont be 12% on the farm and we can maybe lower the payments and just have one instead of 2. I sure hope you can help us out. Thank you brenda kniffen know as mstaz67361

-- brenda k. kniffen (mstaz67361@yahoo.com), March 12, 2002.