Hello again!
One option is to refinance at a lower interest rate, and bring the $39,000 to the closing table in order to bring the financed amount of your mortgage way down. Dropping your interest rate and lowering the mortgage by almost $40k will reduce your monthly payment substantially for your retirement!

I forgot to mention that we are in our early 60's and realize that we will never get this house paid off but do take advance of the tax breaks on paying interest (we usually get all of it back on income tax). I am more concerned about having a reasonable payment that we can afford in retirement. I want to have the taxes ($1100) and insurance ($500) escrowed into the payment. The house appraises for about $120,000. We have great credit so we should get decent rates. Thanks again. I look forward to your input.

Thanks so much for your input. Some more details. The house that we bought for 99K is right across from my daughter and grandchildren a year ago so we went ahead and financed it while we waited for our other home to sell. The plan was that the other house would sell for around $70,000 but then the market dropped. It is a modular home so people had a hard time getting finance for it. We tried renting but that was a bust. We didn't want to do HUD and the renters were alway unrealiable. Finally a cash buyer came and offered us the $39,000 and we took it to wash our hand of the situation. At this point, I think all we can do is refinace. We are currently at a 30 year fixed rate at 6.6%. Do you have any more thoughts on my situation? Is it better to stay at the bank where we have the mortage (Chase) or try a different on? I truly appreciate any advice.

On a $99,000 mortgage, unless you REALLY lower your interest rate, your payments won't change a whole lot. Paying down the principal will not lower your monthly payments unless you have an adjustable interest rate. Larry is right about talking to a financial advisor, however I agree with Joshua that keeping the $39,000 in the bank is a very good idea.

Of course, you can always buy some rental property... ;)

Hello and thank you for the question!
Larry had some excellent points in that your decision needs to be based off of a long-term goal. In this particular job market and the market as a whole, I would probably recommend keeping the $39,000 as liquid funds, because it is nearly impossible at this point to gain access to the equity you have in your home. Lenders are too scared to give borrowers a larger loan if they need cash for bills or other expenses. My mortgage rates, depending on credit of course, are as low as 4.625%, so it may be worth while to pocket the cash and refinance! If I can be of any further help, please do not hesitate to call me at 216-236-7266 (direct number). My company is located in Cleveland, Ohio. Good Luck!

Joshua Pick http://www.CREFCO.com
Sr. Mortgage Consultant

There are several variables you didn't fill in. First, how is the rate on your 99K mortgage? Second, what is your long range goal as far as real estate? Are you going to keep the home with the 99K mortgage for 2,3,5 or 10 or more years? Your decision should be part of a larger plan. I suggest you share that plan with a local financial advisor or your accountant to determine the best course to follow.