Financing in 19063>Question Details

E, Home Owner in San Francisco, CA

Should I refinance to a shorter mortgage?

Asked by E, San Francisco, CA Thu Mar 1, 2012

Is it smart to push closer to my pain point if I could switch my 3yr fixed to a 15yr fixed?

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Hello, I'm sorry for my late response. I wouldn't refinance if it's going to be too high of a monthly payment for you. However, if you can refinance and shorten the term AND keep the payment at a comfortable range for you I'd explore the option. I typically analyze the overall situation of my client, ask for the clients thoughts and together we can come up with a plan. If you qualify it's worth looking into at least refinancing to save money in this market and we could also look into shortening the term if it makes sense. With a longer term there is a bit more of a tax advantage (longer term= more tax write off) but it usually makes sense to refinance into a lower rate because you may savea fortune over time even if your tax write off isn't as high.
0 votes Thank Flag Link Mon Mar 12, 2012
You may want to consider paying an extra mortgage payment a few times a year or pay a couple hundred dollars extra towards your mortage. You will be saving money on closing costs and other refinancing expenses. Make sure to note the extra payments are to go towards PRINCIPLE. Be sure to speak with your accountant and/or financial advisor.
0 votes Thank Flag Link Thu Mar 1, 2012
E,
This is a math problem and a personal choice. As far as the math goes, run some numbers and compare your current payment to what would happen with a lower rate and shorter term. Depending on how much lower the rate goes, you may not see much difference in payment but the shorter term will save you thousands.
The personal choice question is what is important to you? Some people live their lives around cashflow and will refinance a new 30 year mortgage over and over never making any headway but lowering the rate.
Others look to be out of debt in a reasonable time.
One last thought, if you are 5 years into a 30 year fixed mortgage loan and refinancing makes sense, try not to start over. You can do a new 25, 20 or 15 year term, each one will be slightly better in rate and still get you paid off faster than a new 30 year term.
0 votes Thank Flag Link Thu Mar 1, 2012
This is a question for your Financial Advisor and/or Tax Advisor:
You age will def be a factor.
You Income Tax deductions come into play.
What are your long term goals? Retire where?
How old are the kids? Soon to have Empty Nest?

See?
Too many possibles.
0 votes Thank Flag Link Thu Mar 1, 2012
Hello E,

I assume you are saying from a 30 to a 15 year. It saves you a half a percent in intewrest rate. That realkly doesn;t help you if you are hospitalized with stress and high blood pressure
I never recommend pushing to the point of pain umless you are extreemely disciplined AND you have significant reserves.

Interest rate isn't everything especially when you it causes pain.

Regards,
Alan Openshaw
Cornerstone Lending Inc
Southampton Pa 18966
215 953 0800
cell 267 992 7276
VOTED BEST IN BUCKS 2010
NMLS ID 143960
0 votes Thank Flag Link Thu Mar 1, 2012
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