We have been in our current house for about 2.5 years and have a 30 year mortgage at 3.875%. We could refinance to a 30 year at 3.375%. Our mortgage amount is about 500k. Refinancing adds about 12k to the mortgage but even with that, the monthly payment reduces about $210 a month. Is there a downside to doing the refinance?
This is probably way too simplified, but I have been paying the current mortgage for about 30 months (330 more to go). So doing a new 30 year mortgage would add 30 months to our payment schedule (back to 360). If I multiply the $210 savings by 330 months--I save $69,300 for those months. But then when I multiply the mortgage I would be paying by the extra 30 months I would be adding on, it would be about $75,000. So would I actually lose out in the end (assuming I don't ever add payments to the principal)? I know this doesn't factor in what I would have been doing with the money saved each month and if I invest it or use it to pay down the principal.