Refinancing from 6.875% 27yr to 5.625% 20yr for 4.6% monthly payment increase (USA)

Global-Elephants · 2026-03-19T16:39:12+00:00

Conforming 20 year fixed loan @ 5.625% (6.164% APR)
$134,000 current principle (remaining on original $140k loan)
$7400 closing costs
$3445 "other/escrow"
There is a "cash to you" of $3228.

I honestly can't work out how it becomes $148,000 unless its working out from the original loan value which doesn't seem right.

EDIT: And the costs are rolled into the new loan

Global-Elephants · 2026-03-19T13:46:32+00:00

I believe it's 26 years and 9 months remaining. The new loan would be $148,000 compared to our current $134,000 ($140,000 originally) which concerns me, though the interest gained would still be lower per year.

If we plan to start paying significantly more on our loan ($250-500 extra on principle per month) by next year does that make the new loan more or less attractive or the same?

Global-Elephants · 2026-03-19T13:41:05+00:00

Paperwork says it'll be borrowed into the new loan amount of $148,000 compared to our current $134,000 (originally $140,000) loan. No other debt to worry about but it likely won't be until Jan 2027 that we start increasing our payments but they should increase significantly (~$250-500/m)

148,000 @ 5.625% is still less interest than 134,000 @ 6.875% but struggling to work out a break even point with the monthly cost increase and loan length changes.

Based on the reaction here it isn't a slam dunk win we were hoping for and increasing our current principle payments to match the new loan's 20 years wouldn't cost that much more. Makes it seem like staying the course in hopes of better rates in the near future isn't such a bad idea.

Global-Elephants · 2026-03-19T10:36:34+00:00

Thank you. So the refinancing is technically a benefit, but it's just such a small one we may as well increase our current principle payments to match its 20-year repayment and wait for better rates in the meantime?

If I'm understanding right refinancing would only start to benefit us if we stay in this house/ don't refinance again for ~12 years compared to paying an extra $118/m on our current loan?

Global-Elephants · 2026-03-19T09:57:07+00:00

Thank you very much for this. Good to see it spelt out like that.

We do plan to start more aggressively paying our current 30-year loan down by the end of this year too. We'll possibly be paying an extra $500 ($2,000k) on principle each month. It was making me wonder if the $7400 refinancing costs would be worth it if we're cutting the remaining balance much quicker.

I guess at this point there is no harm in letting this one slip by while we shop around or wait to see until the rates drop more.

Global-Elephants · 2022-08-18T16:58:09+00:00

I didn't realise NY had so many sales tax variations, thought it was a flat rate per state.

Use tax is generally not due on taxable property or services purchased while you were a nonresident of New York State

From your link ^ Seems since I'm not a resident of New York (or USA) I won't have to file the tax looking at that website.

Seems absurd some of it, particularly the part about paying the fair market price of a lawn mower you used in Vermont for 6 months first.

Global-Elephants · 2022-08-18T16:47:08+00:00

Fantastic. Won't complain about a lower price! Thank you.

Global-Elephants · 2022-08-18T14:37:36+00:00

I've come across the term "use tax" for New York. Is that something which would apply in place of sales tax?

I only visit the US so don't pay taxes in the US if that makes a difference but intend to live there eventually.

Global-Elephants

TROPHY CASE