Anyone willing to help - refinancing spreadsheets?

[smalltime]

Hello,

I'm a longtime lurker and a first-time poster. I've been trying to decide if refinancing makes sense for me and I wondered if someone who has a spreadsheet set up might be willing to help?

We currently have an adjustable-rate mortgage through our Credit Union. It just reset from 3.75% to 4.75%. It's a 30 year mortgage. We've had the mortgage for 8 years and it can adjust every two years.

The balance on our mortgage is $117,077. We also have a HELOC with a balance of $13,980 and an interest rate of 4.75%

The Credit Union offers a 20 year fixed-rate mortgage with a rate of 5%. If we refinanced to this, it is my understanding there would not be any points or fees. The only thing we would have to pay for is the appraisal. If I refinanced both the mortgage loan and the HELOC, it looks like our payment would remain the same which is important to me.

My question is - is it stupid to combine the HELOC (which I think would be paid off in 8-9 years with our current payment) with our mortgage in order to get a fixed rate? How much extra interest would I pay in the long term? I'm worried that we will miss the boat on low interest rates if we don't refinance soon - but our budget is tight.

I appreciate any help anyone can give! I've learned a lot from these boards over the past year or two!

[Gardening Grandma]

I'm having a problem with increasing the interest rate in order to get a fixed rate. The first thing I'd do is find out what the going fixed rate is in your area.
bankrate.com is good for that.....

The second thing I have a problem with would be rolling the HELOC into the fixed rate - If you can refi the mortgage and get a lower payment, you could work on paying off the HELOC...

Then proceed from there.

This site has a number of refinance calculators that may be helpful
www.mtgprofessor.com/CalculatorArticles/Refinance%20Calculators.html

[smalltime]

Thank you GardeningGrandma - that calculator was exactly the kind of thing I was looking for.

I agree with you that in basic money terms this refinance does not make sense - and your post helped clarify for me that I have two irrational (or maybe rational) fears that I need to work out:

Fear 1 - I don't trust any bank but the Credit Union. I'm afraid they will jerk me around or not work with me if one of us ever lost our jobs - so I'm willing to pay slightly more to stay with them.

Fear 2 - If I don't get a fixed rate now, I'll have to pay 7 or 8 % in a couple of years.

I going to put some numbers into that calculator and check around with other banks to see what their rates are.

I appreciate the help!

[Gardening Grandma]

Well, I've dealt with both banks and credit unions. I do prefer credit unions, however I've had no major problems with banks and I've had (over the years) 5 mortgages with banks.

So I'd encourage you to keep an open mind about which institution and focus on crunching the numbers. You may discover that the best deal for you IS with the credit union, but you won't know until you look around.

[phil5185]

I would take the loan, IMO a 20-yr FR at 5% is way better than an ARM - (your fear #2 is real). And I would combine the two loans. You pay an extra 1/4% in the short term but that is good insurance against future rate hikes. There will probably be a time in the next 20 yrs when rates are 8% or 10%, this insures that you pay 5%. (and if rates ever got down to 4%, 3%, 2% in 20 yrs you still have the option of doing another refi).

[smalltime]

Thank you Phil - your answer was the one I was hoping to get.

I'm still going to play around with the calculator GardeningGrandma recommended and see if I can figure out how much extra interest we will pay, and I might check out other banks as well.

Thank you both for your help!