should we refinance? *special situation*
okay, we are wondering if we should refinance our current loan... we have had it for about 1 year, balance 25k @ 11.25 interest. the reason the interest is so high is because *technically* it is a 2nd mortgage. when we got our house we had the help of HUD to buy it. they gave us just under 10k with the stipulation we had to stay there for 10 years.
we had been free and clear of any kind of mortgage payment for several years (the remainder of the 20k purchase price was a gift from in laws) untill last year when we hit some pretty heafty medical expenses, as well as some home repairs that HAD to be done (front porch about to collapse).
so we looked into a home equity loan. we only needed about 10k, but most places would not give us LESS than 25k. so we decided to take 26,500 for 10 years and paid off our 11k car loan and the rest of our debt (
we plan on selling our current house in another 4 years when our obligation to HUD is up and building a brand new house. we plan to put our house on the market for between 80-100k.
we were thinking that when we sell, we would pay off our current loan, and take the 60-80k profit and borrow another 20-40k from my father in law (he as already agreed to this).
should we refinance if we plan on paying it off in 4 years? would the savings on interest be greater than the 2k closing costs?
we would also like to take an additional 5k for more home improvments.
current bal: 25,500
interest rate: 11.25
term: 10 years
payment: $375 - does not include taxes/ins
we were quoted this from FHA
want to take: 32,000
interest rate: 7.49
term: 30 years
payment: $350 - including taxes/ins