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twatson · Joined: 19 May 2008 Posts: 2 1.92 Dollars($)

Would it be wise to refinance to a much longer mortgage in order to lessen monthly payments? I have 25 year term with a reasonable rate. I am buying a new car, and it got me to wondering. What if I refinanced a 30 or even 40 year mortgage at a comparable or even lower rate? Is there a tax benefit? I can and will save more if I lower my monthly payment considerably.

gmakerley · Posted: Mon May 19, 2008 1:43 pm Post subject:

twatson, i would say the most important thing to think about is to assure yourself you know what you're getting into if you do a refinance. yes, you can certainly save yourself some money on a monthly basis, but only you can determine if it would be beneficial in the long run.

typically, it isn't viewed as the best thing to do.

cliff3 · Posted: Mon May 19, 2008 3:31 pm Post subject:

Ditto, if you refinance into a longer term mortgage you will end up paying more interest overtime. This money could be used to invest into retirement rather than being paid to a bank.

brad · Posted: Tue May 20, 2008 10:09 am Post subject:

Are you thinking of refinancing because you are having a hard time keeping up with the payments you are in now? If you can comfortably afford your current payments, then there is no reason for you to refinance and pay for an appraisal as well as closing costs once again. You will likely be coming out on the losing end of that deal.

Also it can be some what depressing these days when you get your appraisal done and see what the current market values are. Save your self some hassle. IF you can afford what you have now then stick with it.

twatson · Joined: 19 May 2008 Posts: 2 1.92 Dollars($)

Thanks, everyone. Part of my confusion stems from the fact that I am told that paying off a mortgage early is not wise from a tax-deduction standpoint. I therefore deduced that having that deduction for a longer term would not be such a bad thing, and it would leave extra money to quickly pay off my new car (my beloved 95 Dodge Neon just died - sniff). I could then start making accelerated mortgage payments, having the option of paying the smaller monthly payment if necessary. I have the discipline to do that, and I have a very small debt load.
Instinctively, I know I want as short a mortgage as possible, and I can continue to make my payments, so that's not a problem.

cliff3 · Posted: Tue May 20, 2008 5:33 pm Post subject:

No problem. It is always better to payoff a mortgage rather than use the money from a mortgage to payoff a depreciating asset. My back ground is in finance, accounting and economics. So I no a little about making money. People always try and sell people on consolidating debt etc. but, you can do all this yourself with a good budget.

Hope this helps and if you have any other financial strategy questions feel free to ask or e-mail me. Very Happy

I've mad alot of money in my time and have been able to keep it.

Caron

Hi Twatson,

I can understand that you want to save more to pay for your car. But don't you think 40 years is a long term and you'll be paying a larger interest in total just to save some money now. Can you try for a part time job to pay for your car? And as the others said, if you can move according to a tight budget I think that can really help. You can download the Simple budgeting tool developed by this community and use it to keep a track of your daily spending.

Good luck

lisascherzer · Joined: 04 Jan 2008 Posts: 755 1.12 Dollars($)

I would rather not pay interest on a mortgage that get a deduction on my taxes for it. It's definately better to pay off a mortgage. The difference between 25 and 30 years is very little in payment. Unless you have an adjustable rate or a fixed rate over 6.375 then I would stick with what you have.

cliff3 · Posted: Sat May 24, 2008 1:55 pm Post subject:

Good point!

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