Summary: When you refinance your house and borrow more money, how to calculate the incremental interest rate you pay?
I currently owe $95K on my house, 4.75% interest rate, $510 monthly payment (principal and interest, excludes escrow), 28.75 years remaining on 30-year fixed rate mortgage.
I'm looking to refinance for $128K, 5.625% interest rate, $737 monthly payment, 30-year fixed mortgage.
I think 5.625% is a good rate to borrow money, but that's not exactly what's happening here.
Instead, I'm getting an extra $33K, but paying a higher interest rate on the entire $128K.
What interest rate am I effectively paying on the extra $33K that I'm borrowing?
For example, I'm effectively paying $227 per month to borrow $33K. What rate does that work out to?