I have 27 more years to pay my mortgage at 879.18/mo with a $120,000 mortgage payable in 30 years, at a rate of 6.372%. I can refinance with 5.25% in 15 years at $1103/mo. Will this save me more compared to paying $1103 per month with my original 6.375% mortgage? I understand that the 27 years will be lessened if I pay more.
If the same amount of money is due on each mortgage at the beginning and you pay the same amount monthly, the mortgage with the lower rate of interest will cost you less. Put another way, if the $1103 payment will pay off the 5.25% loan in 15 years, it will take longer than 15 years to pay off the same loan amount at 6.375% using the same $1103 payment.
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If the same amount of money is due on each mortgage at the beginning and you pay the same amount monthly, the mortgage with the lower rate of interest will cost you less. Put another way, if the $1103 payment will pay off the 5.25% loan in 15 years, it will take longer than 15 years to pay off the same loan amount at 6.375% using the same $1103 payment.
