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I know most people who bought primary residence this year or late last year bought it in an intention to refinance. Here is my assessment, please help with your thoughts.. 1. Fed may increase rate one more time https://www.bankrate.com/banking/federal-reserve/how-much-will-fed-raise-rates-in-2023/ 2. rates will be unchanged for 2024 (election year) 3. Hoping economy will be on positive direction we can start to see rates lowered by mid 2025. 4. Rates won’t just fall but the decrease will be steady which means to go from 8.5 to 7.5 to 6.5 to 5.5 takes 2-3 years.. so now, here is the scenario, most folks bought their houses with interest rates from 5.5 to 6.5. on a $600k home, 10% down, loan amount is $540k at 6% interest rate. Please see two amortization schedules 1. from 2023 to 2027, at 6% 2. Refinanced amortization schedule at 5% interest rates in 2027. if you compare 2027 original loan vs 2027 refinanced loan there is $400/month decrease in interest rates but original loan contribution towards principal is high. So, in theory one could save $4000 per year if interest rates go down by 1% but loan refinance costs will be 1% of loan which is $5000. Then what is the point of refinancing? Next year it may reduce to 4% and that will be it. Again refinance by paying 1% of the loan. I feel paying to principal periodically will help to lower the money going towards interest. instead of buying unwanted items, second car (mostly Tesla), solar panels, investment homes. I think paying towards principal is a profit when you compare it for a period of 5-7 years from now. Please correct me if I am wrong. Loan amount Loan term30 years20 years15 years10 years Interest rate Loan start date Selected month: February 2023 Optional: Make extra payments By adding extra payment, you can pay off your loan faster and save on interest. SUMMARY Number of payments: 360 Monthly payment $3,238 Total interest paid $625,526 Total cost of loan $1,165,526 Payoff date Feb 2053 Chart Schedule Amortization schedule breakdown This table lists how much principal and interest are paid in each scheduled mortgage payment. First payment Last payment Feb 2053 Date Principal Interest Remaining balance 2023 March $537.57 $2,700.00 $539,462.43 April $540.26 $2,697.31 $538,922.17 May $542.96 $2,694.61 $538,379.20 June $545.68 $2,691.90 $537,833.53 July $548.41 $2,689.17 $537,285.12 August $551.15 $2,686.43 $536,733.98 September $553.90 $2,683.67 $536,180.07 October $556.67 $2,680.90 $535,623.40 November $559.46 $2,678.12 $535,063.94 December $562.25 $2,675.32 $534,501.69 2024 January $565.06 $2,672.51 $533,936.63 February $567.89 $2,669.68 $533,368.74 March $570.73 $2,666.84 $532,798.01 April $573.58 $2,663.99 $532,224.42 May $576.45 $2,661.12 $531,647.97 June $579.33 $2,658.24 $531,068.64 July $582.23 $2,655.34 $530,486.41 August $585.14 $2,652.43 $529,901.27 September $588.07 $2,649.51 $529,313.20 October $591.01 $2,646.57 $528,722.20 November $593.96 $2,643.61 $528,128.24 December $596.93 $2,640.64 $527,531.30 2025 January $599.92 $2,637.66 $526,931.39 February $602.92 $2,634.66 $526,328.47 March $605.93 $2,631.64 $525,722.54 April $608.96 $2,628.61 $525,113.58 May $612.00 $2,625.57 $524,501.58 June $615.06 $2,622.51 $523,886.51 July $618.14 $2,619.43 $523,268.37 August $621.23 $2,616.34 $522,647.14 September $624.34 $2,613.24 $522,022.80 October $627.46 $2,610.11 $521,395.34 November $630.60 $2,606.98 $520,764.75 December $633.75 $2,603.82 $520,131.00 2026 January $636.92 $2,600.65 $519,494.08 February $640.10 $2,597.47 $518,853.98 March $643.30 $2,594.27 $518,210.68 April $646.52 $2,591.05 $517,564.16 May $649.75 $2,587.82 $516,914.40 June $653.00 $2,584.57 $516,261.40 July $656.27 $2,581.31 $515,605.14 August $659.55 $2,578.03 $514,945.59 September $662.84 $2,574.73 $514,282.75 October $666.16 $2,571.41 $513,616.59 November $669.49 $2,568.08 $512,947.10 December $672.84 $2,564.74 $512,274.26 2027 January $676.20 $2,561.37 $511,598.06 February $679.58 $2,557.99 $510,918.47 March $682.98 $2,554.59 $510,235.49 April $686.40 $2,551.18 $509,549.10 May $689.83 $2,547.75 $508,859.27 June $693.28 $2,544.30 $508,166.00 July $696.74 $2,540.83 $507,469.25 August $700.23 $2,537.35 $506,769.03 September $703.73 $2,533.85 $506,065.30 October $707.25 $2,530.33 $505,358.05 November $710.78 $2,526.79 $504,647.27 December $714.34 $2,523.24 $503,932.93 refinanced at 5% Date Principal Interest Remaining balance 2027 February $615.52 $2,134.47 $511,658.48 March $618.09 $2,131.91 $511,040.39 April $620.66 $2,129.33 $510,419.73 May $623.25 $2,126.75 $509,796.48 June $625.85 $2,124.15 $509,170.63 July $628.45 $2,121.54 $508,542.18 August $631.07 $2,118.93 $507,911.11 September $633.70 $2,116.30 $507,277.41 October $636.34 $2,113.66 $506,641.06 November $638.99 $2,111.00 $506,002.07 December $641.66 $2,108.34 $505,360.42 2028 January $644.33 $2,105.67 $504,716.09 February $647.01 $2,102.98 $504,069.07 March $649.71 $2,100.29 $503,419.36 April $652.42 $2,097.58 $502,766.95 May $655.14 $2,094.86 $502,111.81 June $657.87 $2,092.13 $501,453.95 July $660.61 $2,089.39 $500,793.34 August $663.36 $2,086.64 $500,129.98 September $666.12 $2,083.87 $499,463.86 October $668.90 $2,081.10 $498,794.96 November $671.69 $2,078.31 $498,123.27 December $674.48 $2,075.51 $497,448.79