May
2
Should i refinance to a 15yr mortgage, with 91/2 yrs left on present mtg, at same rate, and consolidate debts?
Filed Under Personal Finance
Evan R
Potential savings $750.00 a month. However, adding 51/2 years to pay-off the house. Rate by the way is %4.50, same as my present rate.
Potential savings $750.00 a month. However, adding 51/2 years to pay-off the house. Rate by the way is %4.50, same as my present rate.
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3 Responses to “Should i refinance to a 15yr mortgage, with 91/2 yrs left on present mtg, at same rate, and consolidate debts?”
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It might add time to your mortgage, but it would almost even out considering credit cards charge 3, 4 or 5 times the interest. I could put the formula here but it might be easier for you to google an online mortgage calculator. You can put in the cost of the new mortgage with the rate and all that, then just do the same thing with your credit card balances, and input the appropriate interest rates. I did an example on my own, pretend you owe $18,000 at 18%, if you wanted them paid off in 5 years, it would be $208 bi-weekly, or $450/m if you wanted to pay monthly. If you refinanced your mortgage for that amount but with 4.5%, the monthly payment would be $335. Refinancing would cost you about $4000 in interest, whereas holding onto the credit cards would cost you almost $9000 even though you have the mortgage for almost twice as long.
You should never treat your home as an ATM. If you go through with the refinance what is to prevent you from running up those credit cards again.
It depends on how much it will cost you to do the refinance, and what you will do with that extra money. For example, if it will cost you $3,000 in closing costs to refinance $50,000 loan, and you would only spend that $750 on fun things then probably not.
If on the other hand, someone in your house lost their job, or got ill, and this is the only way you can afford to stay in the house, then yes. Just realize that you won’t be done paying for it until 2025. If you are thinking of retiring sometime around 10 years, then realize you might not be able to retire as you will still have a payment to make.