Are some loans too small to re-fi?

Five years ago, I took out a mortgage for $149,000 at 6.25 percent. The current balance is $119,000. I'd like to re-fi since I plan on staying in the house, but I was told that this is a rather small amount to refinance. I'd like to go to a 15 year mortgage. I max out my 403(b), my salary is $63,000 and I have a couple of extra dollars available each month. Am I better off just adding it to the mortgage payments? Suggestions?

Anyone who has looked into refinancing knows that when you call a mortgage broker, the first two questions that are asked are "where is the property located?" and "how much are you looking to refinance?" You must answer these two questions before you can get a rate quote.

Officially, there is no minimum imposed on a refinance, but in practice, there really is. Let me explain. Basically, there is the same amount of work involved whether a broker processes a $500,000 mortgage or a $100,000 mortgage. To make a reasonable profit on both loans, the rate quoted on the smaller loan will generally be higher. In your case, you may find that the rates you are quoted are higher than the rates you see advertised in the papers. That is likely due to the relatively small amount you are looking to refinance.

At the current time, I think it might be hard for you to find a rate that is much better that what you already have. I think your best course of action is to avoid the cost and hassle associated with a re-fi and simply add a few dollars to your monthly payment. Check out this calculator to find out how much you need to pay each month in order to pay off your current loan in 15 years.