Should I refinance with only 7 years left on loan?

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Post Posted: Sun Oct 11, 2009 5:20 pm    Post subject: Should I refinance with only 7 years left on loan?
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I only have 7 years left on my mortgage, however, the interest rate is at 6.375% and I feel like I can get between 4.5% and 5%. I owe about $58k on my mortgage and the payment amount is $865 per month and I pay an additional $25 per month principal. Would it be smart to look into refinancing for a lower interest rate only (not necessarily to lower the payment, but perhaps to pay off sooner)?
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Post Posted: Sun Oct 11, 2009 8:50 pm    Post subject:
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Hi Guest,

I don't think it would be a good option to refinance the loan now as you've only 7 years left to complete the loan payments. I can understand that a refinance would help you in lowering your interest rate but you would be liable for paying the closing costs which would be quite a huge sum. You won't be able to offset such a huge sum of money within 7 years. So I don't think it would be of any help to refinance the loan now.

Thanks
Icon Mini Profile gmakerley
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Post Posted: Sun Oct 11, 2009 9:51 pm    Post subject:
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with only 7 years remaining, your savings would be negligible. unless you are interested in tapping the equity in your home for some reason, i agree with james wholeheartedly.
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Post Posted: Mon Oct 12, 2009 6:38 am    Post subject:
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George, a little battle with insomnia?

I will add my two cents to this topic...

Guest, if you can find a HELOC at a much lower rate, then I would definitely consider doing it. Your fees on the HELOC will be minimal. Then, if you continue to make the same payments that you are making now...you will pay down the loan much faster than 7 years and WILL save quite a bit of interest.

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Last edited by eric1 on Mon Oct 12, 2009 7:30 am
Icon Mini Profile gmakerley
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Post Posted: Mon Oct 12, 2009 7:13 am    Post subject:
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i'm usually up late anyway, eric - just very seldom on here. my situation's different now, so in all likelihood you'll see later posts for a short while.

you're right about equity loans, too...some of them are extraordinarily low these days.

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