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Liquidretro t1_iyeqa7m wrote

Reply to comment by TheDemonsTalk in Question about first time home buying by [deleted]

It's bad advice to wait 10 or 15 years without major caveats. Refinance when it makes sense financially is a lot better advice.

The first time I refied was a year after I bought my house, I went from 5% to 4% interest rate, and the change in payments paid for the refi cost in less than a year, and I knew I was going to be living there for past that time period.

I would agree it's generally not a good idea to keep adding time onto a mortgage and prolonging interest but you can accomplish that and still lower your overall borrowing cost.

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TheDemonsTalk t1_iyerh20 wrote

The reason why you should wait is because your mortgage normally consists of the most interests payments during your first 5 years or so. If you refi again right after you just got a mortgage, you'll just be paying the interest, not your debt. You should always pay down your debt first... your new refi will carry your outstanding debt... always pay down debt first.

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Liquidretro t1_iyevau8 wrote

I get what you are saying, the debt is known as principal and that's debt amortization, all pretty standard stuff. I would disagree though that that's a good reason for waiting in the long run if you do the math. You are right if you were only refing for a small rate drop though.

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