Question

Hi Everyone - I’m about to refinance my mortgage. I’m hesitant to sign on the dotted line because my monthly payment will go up by about $200. I have 27 years left on the loan. I’m refinancing to a loan with a lower rate, 3. 25% and to a shorter term, 20 years. I’ll save almost $100, 000 in interest. The house will be paid off by the time I reach retirement age (sooner if I can send extra payments). My only debt right now is a home equity loan of $10, 000 which will go into the new mortgage and my car, $19, 000 left. My husband has a balance of $13000 on a business credit card (he had a small business). He no longer works. He’s on disability due to a stroke (Nov. 2019). I will get get a refund of the accumulated escrow and will use that to pay down my husband’s credit card. Should I go for it? Seems like a no brainer that I should. But I’m just afraid that I’m missing something. If I stick to my budget, I have room for the additional $200 and can continue to save.  

Answer 1

Are you rolling the car into the refinance too? I would not.  

Answer 2

Don't roll a depreciating asset (car) or any credit card debt into a mortgage. Go for a 30 year mortgage with the home equity loan rolled in and make extra principal payments once car is paid off.  

Answer 3

As long as you can comfortably pay the extra $200, I’d do it. It will save you a lot over the long run and set you up for a more comfortable retirement.  

Answer 4

As long as you can afford it and still save and live comfortably then I think it is a good deal.  

Answer 5

If you are rolling the car and credit card into the new mortgage, I imagine that those two payments are higher than the extra $200 per month your new loan is increasing, so you’re technically still saving, plus paying your home off faster and saving the interest. Even if you aren’t rolling them in, it sounds like this will put you in a better position long term especially if you are not planning on moving. Good luck!  

Answer 6

I’m definitely not rolling the car loan or the credit car balance into the mortgage.  

Answer 7

Can you leave it at the 27 years but pay the extra $200 on it as if you were doing it over 20 years? Then if something happens (changes to work etc). You can drop your payments back.  

Answer 8

I say do it, interest rates are amazing and saving $100, 000 in interest is something that will be hard to make il other ways (besides investing the $200 extra a month)!  

Answer 9

I did change my mortgage a few years ago, I changed it from 21 to 10 years. I planned to pay it down in 8 years but did 10 years on paper to have the freedom in my monthly budget. I pay my regular payment every month and the extra money that I would have payed if I did an eight years I put in a savingsaccount and pay extra once or twice a year, This does so that if I have a month where I have an extra high bill or are going away with family or friend I have the extras to pay for it. I can save it in other months again.  

Answer 10

So we just refinanced for cash out to purchase the other half of a house that we co-owned with my brother in law. we also took a little more cash out to do some work on the house. I came on here to tell you that we looked into 15 versus 30 years. The interest rates for 30 year was the same as the 15 for us (this may be different for you), so we opted to go with the 30 year loan but plan to pay it back in 15 by making automated payments of our current mortgage plus additional principle payments each month. In the end it cost 1-2k more than just going with the 15 year, but if something did happen and we needed that lower payment, we could fall back on it. How ever you do it, I def would pay off the high interest credit card with cash out. The refinance is a great move for you!  

Answer 11

Thank you all for your comments and suggestions. A few recommended looking into a 30 year loan. Honestly, it didn’t make sense to me to extend the term. But I reached out to the rep and asked her to run the numbers for me. And. we decided to go with the 30 year loan. The interest rate is still great and I will have some room in case I need it. I will commit to sending the extra $200 on a monthly basis to still pay it off early. Again, thank you all for the comments and input!  

Answer 12

How much is your home equity loan payment currently

Comments

@diapedesis6 I owe just under $10, 000

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@polka89 but how much is that payment

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@diapedesis6 oh. it’s interest only. I’ve been paying about $36 a month. Not paying it down

Answer 13

Yes do it. You’ll be amazed at how much of your monthly payments go toward principle. You’ll gain equity in your house so much quicker. We went down to a 20 year about 3 years ago and it’s been awesome.  

Answer 14

Absolutely do it!  

Answer 15

Who is your loan company? We just refianced & signed with quicken loans monday night We went from 3. 99 to 2. 99% From 26 1/2 years to 20 year . saving us a total of $125, 000. Our pymt went up $150 a month. They did give us a second option keep interest rate at 3. 99 and took a year off loan. Payment would stay the same not worth it to me.  

Comments

@paregoric I’m using Quicken Loan as well.  

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@polka89 they are the best they call you and tell you when they can save you money love them! Been with them for 5 years

Answer 16

I see you are using quicken. Confirm that the rate you are getting is par. that you aren’t buying it down. They are very sneaky. Ultimately we got a better rate with a smaller and local company. Something worth getting a second opinion on.  

Comments

@jetty same here! Quicken offered me a super low interest rate but never verbally mentioned that I’d have to buy down in order to get that rate. Didn’t realize it until they sent me the disclosures for review.  

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@crwth US TOO. I was appalled.  

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@jetty My mortgage is currently with Chase. So I checked with them. The rate with chase was just a little higher. But I will check with Quicken to confirm about the buy down.  

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@polka89 id highly encourage you to check with a local lender. The rate may appear lower with quicken but they are likely quoting you a buy down rate and rolling thousands of dollars into your principle.  

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@jetty I’m checking with my credit union. Thanks for the suggestion.  

Answer 17

Go for it

Answer 18

All good except rolling other loans

Answer 19

Do it and save all that interest in the long run!