Return to the Household Finances Forum | Post a Follow-Up

 o
refinance mortgage????

Posted by bill_h (My Page) on
Sun, Apr 16, 06 at 4:23

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??


Follow-Up Postings:

 o
RE: refinance mortgage????

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?


 o
RE: refinance mortgage????

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.


 o
RE: refinance mortgage????

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


 o
RE: refinance mortgage????

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.


 o
RE: refinance mortgage????

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


 o
RE: refinance mortgage????

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.


 o
RE: refinance mortgage????

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.


 o
RE: refinance mortgage????

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.


 o
RE: refinance mortgage????

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.


 o Post a Follow-Up

Please Note: Only registered members are able to post messages to this forum.

    If you are a member, please log in.

    If you aren't yet a member, join now!


Return to the Household Finances Forum

Information about Posting

  • You must be logged in to post a message. Once you are logged in, a posting window will appear at the bottom of the messages. If you are not a member, please register for an account.
  • Posting is a two-step process. Once you have composed your message, you will be taken to the preview page. You will then have a chance to review your post, make changes and upload photos.
  • After posting your message, you may need to refresh the forum page in order to see it.
  • Before posting copyrighted material, please read about Copyright and Fair Use.
  • We have a strict no-advertising policy!
  • If you would like to practice posting or uploading photos, please visit our Test forum.
  • If you need assistance, please Contact Us and we will be happy to help.


Learn more about in-text links on this page here