refinance mortgage????

bill_hApril 16, 2006

we have a house valued at 124k, we owe 60k on it, at 4.75 rate. we are thinking of refinacing that 60k we would put 20k down on the refinance, leaving us with a 40k mortgage. why you ask. my wife will be forced out of her job, within the next yr to yr and a half, cutting our income, and we are thinking this would be a good way to lower the house payment, to free up extra cash when this happens. pros?? cons?? other than a higher interest rt, we dont see any major downside to this. am i missing any??

Thank you for reporting this comment. Undo
gibby2015

I'm no expert but I've refinanced a few times and never for a higher rate or longer term. One of the prinicples that guides my financial decisions is whether or not what I'm doing increases my net worth. Paying more interest and less principle on a mortgage doesn't. We have had a couple situations where DH has not been working and the first thing we have done is cut all non-essential spending. Fortunately we've never had to refinance a mortgage to cut our expenses.

Is it not possible for your wife to find a new job in the next year and not cut her income?

    Bookmark   April 16, 2006 at 10:01AM
Thank you for reporting this comment. Undo
harriethomeowner

That's not going to lower your payment by very much -- less than $100/month, right? And that's not counting the fees involved in refinancing.

    Bookmark   April 16, 2006 at 2:16PM
Thank you for reporting this comment. Undo
bill_h

the fees, forgot that one. yep i dont see much advantage to it.

    Bookmark   April 16, 2006 at 8:05PM
Thank you for reporting this comment. Undo
celticmoon

Your 4.75 rate, assuming it is a fixed rate, is unbeatable. Rates now are above 6%. That is about a 25-30% increase in the interest rate. You are considering going from 60k to 40k which is a 33% decrease in the loan amount. After considering lengthening the term by restarting the loan clock, as well as the expense of a refinance, it seems like a wash. Your monthly payment likely won't change too much, but you will owe for longer.

Enjoy your 4.75 loan and try to ride it out.

    Bookmark   April 16, 2006 at 10:22PM
Thank you for reporting this comment. Undo
myfask

you mention putting 20k down it wasn't clear, is that coming from savings?
Karla

    Bookmark   April 17, 2006 at 9:30AM
Thank you for reporting this comment. Undo
davidandkasie

if you cut nonessential spending and use part of the 20 to help make ends meet until she gets a new job, then you would likely be better leaving things alone.

    Bookmark   April 17, 2006 at 10:35AM
Thank you for reporting this comment. Undo
housenewbie

Why not cut down on spending now, and start putting away money to use to help w/ the mortgage when the time comes?

I've never heard of refinancing into a higher rate.

    Bookmark   April 17, 2006 at 12:40PM
Thank you for reporting this comment. Undo
jasper_60103

yeah, I agree with above posts. You got a sweet deal on the current mortgage.

Eliminate cable/sat tv, internet, cell phones, eating out, vacation, etc...
Even pickup a part time job if possible.

    Bookmark   April 17, 2006 at 1:50PM
Thank you for reporting this comment. Undo
bill_h

thanks all, was just a thought. but now i have a signed purchase agreement on my home. so i dont need to worry about it, when its sold, we are going to buy a small condo, and will be able to pay cash, so we wont need a mortgage.

    Bookmark   April 17, 2006 at 7:47PM
Sign Up to comment
More Discussions
Tiny pension - Taking lump sum or monthly annuity payment
I just received a notice from a previous employer asking...
azmom
Family Banking Concept, anyone heard of it?
I did a search here and did not see any similiar thread....
rjinga
Accounting Question
I was hoping there'd be an accounting forum her on...
andrelaplume2
I NEED to vent!
I am so UPSET Just received a notice from my credit...
KarenPA_6b
anyone had trouble getting an Amex card accepted?
I have an Amex card with a very good cashback program,...
davidrt28 (zone 7)
People viewed this after searching for:
© 2015 Houzz Inc. Houzz® The new way to design your home™