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Old 03-14-2016, 02:34 PM
 
Location: NE Mississippi
13,872 posts, read 8,718,472 times
Reputation: 20194

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Quote:
Originally Posted by beer belly View Post
We have 20 years left on our Mortgage, and are looking at retirement in anywhere between 6-9 years. I was thinking, if we refinance back to a 30 year Mortgage to lower our payment till retirement, what would it hurt ?....our payoff wouldn't change, and we do plan on selling when we retire....it would free up some cash....am I missing something ?
We did not refinance.
Instead, we accelerated the payments and got out from underneath the mortgage completely. It was a GOOD move!

You only have to pay off a house once. If you move to a much more expensive area, that becomes not-so-true, but generally paying for a house is a once in a lifetime event. After that, you carry the money forward no matter where you go.

We LOVE being retired and being debt free. I recommend that approach for just about everyone.

So I would pay off that 20 year mortgage in 10 years. It's not as expensive as you think:
If you are on payment number 120, make that payment PLUS the principle on payment number 121.
Next month, pay number 122 PLUS the principle on payment number 123.

You will not believe how good you will feel knowing you will never have to consider mortgage payments again.
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Old 03-14-2016, 02:39 PM
 
Location: East of Seattle since 1992, originally from SF Bay Area
30,168 posts, read 55,027,438 times
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If the current interest rate is significantly less than the current mortgage, and the "freed up" money will be used for renovations and maintenance to prepare the home for sale, then it could be worth the effort. You would also have to factor in the upfront cost of the new loan.
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Old 03-14-2016, 06:46 PM
 
Location: Florida
5,402 posts, read 3,104,526 times
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There was no way I would retire while still paying on a mortgage.

It was wonderful knowing that never again would I ever have to make a mortgage payment.
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Old 03-16-2016, 08:10 PM
 
29 posts, read 22,341 times
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Try running the numbers through an online mortgage refinance calculator - there are many - such as
http://www.zillow.com/mortgage-calcu...nce-calculator
and see how much your total payments change after you refinance vs. before. Your monthly payments are lower but you're making them over a much longer time. If you're okay with that, then fine. Also remember though that unexpected expenses might come up in the future e.g. a house repair, or a medical bill. Part of the freed up cash will need to create a cushion for that.
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Old 03-17-2016, 06:07 AM
 
Location: SW Corner of CT
1,954 posts, read 1,565,411 times
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After reading some replies, I think it best we stay where we are at for the next 6-9 years, but will at least give a look at the affordability of refinancing to a 10 or 15 year....depends on the additional cost, and how it will effect our current budget. Thanks folks
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Old 03-17-2016, 09:49 AM
 
Location: Florida -
8,816 posts, read 10,952,151 times
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Quote:
Originally Posted by beer belly View Post
After reading some replies, I think it best we stay where we are at for the next 6-9 years, but will at least give a look at the affordability of refinancing to a 10 or 15 year....depends on the additional cost, and how it will effect our current budget. Thanks folks
I think you'll be pleasantly surprised at how little extra it will cost you to reduce your remaining mortgage term to correspond with your anticipated retirement date ... particularly with today's lower interest rates. There's nothing like heading into retirement mortgage free!
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Old 03-17-2016, 10:49 PM
 
Location: Florida
5,402 posts, read 3,104,526 times
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I paid off a 15 year mortgage in 10 years by just paying more than the standard payment amount. As you go along more and more of the payment goes to pay down the principal.
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Old 03-18-2016, 10:12 AM
 
3,460 posts, read 2,231,575 times
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Quote:
Originally Posted by FiveLoaves View Post
One thing to keep in mind -- You've already paid a great deal of interest on your current Mortgage. If you start a new loan, you won't be touching the Principal for a while.

If you're less than 10 years from retirement.....how much are you really going to save on this new loan ???
That's an interesting point. It would be a good math exercise to calculate the total interest payments left on the current loan using the proposed sell date vs. a new loan also using the proposed sell date.
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Old 03-19-2016, 11:58 PM
 
Location: VT; previously MD & NJ
2,248 posts, read 1,393,507 times
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Quote:
Originally Posted by engineman View Post
I paid off a 15 year mortgage in 10 years by just paying more than the standard payment amount. As you go along more and more of the payment goes to pay down the principal.
Me too.
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Old 03-20-2016, 05:13 AM
 
1,099 posts, read 671,289 times
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I always scratch my head when this topic comes up whenever someone starts talking about how you will pay all that interest on the front end of your mortgage if you refinance and how it's not a good idea, and I think there's a bit of confusion on this issue. Clearly if one has an opportunity to refinance a loan to a significantly lower interest rate, depending on the size of the mortgage, the break even could be fairly short on the closing costs. The only reason more is going to interest is that you're extending the period of time to pay it off and making lower payments. Let's take his example and I'll throw in some numbers (not supplied by him)....

Loan $300K
Length 30 years
Interest 5.5%
Mortgage payment $1703
Payoff Date April 2036

After 10 years, principal is $247,055

Refinance:

Loan $255,055 (added $8k for closing costs)
Length 30 years
Interest 3.5%
Mortgage Payment $1145
Payoff Date April 2046

If beer belly continues to make the same mortgage payment as his previous loan ($1703...so he pays an additional $558 over the new payment), his new payoff date will be Sept 2032 (so he pays it off 3 1/2 years earlier)

If he decides to only pay $338 over his new payment (so $1483), he will payoff his loan at the exact same time and have an addition $220 a month

Admittedly I ran this for a 30 year period and beer belly will have to run the numbers for the 6-9 years he's thinking of to figure out a break even, but I'm just trying to illustrate a point here. Just blanketly saying you should never refinance tells me that some people don't understand financing.

Last edited by bodyforlife99; 03-20-2016 at 06:03 AM..
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