Question by Joey T: Would anyone be able to explain the value of refinancing a home loan…?
I’ve recently purchased my parents home in order to free up income for them so they can live a better lifestyle and have more “throw” away income later in their life.
My situation is this: I refi‘d their home instead of getting a traditional mortgage with a rate of 6.35ish in Sept. I am set up on a 20yr bi-weekly payment which should pay off in 17 years without putting any additional monies onto each payment (thank you to one of my friends for giving me that information about the bi-weekly payments. Saving 3 years right off the bat was very awesome…).
With the rates going so low lately should I consider refinancing in order to lower payments and/or timeframe of the loan?
Best answer:
Answer by Alterfemego
As you understand, there are pro’s and con’s in your case. But keep in mind that we aren’t lenders and don’t have your whole financial picture to consider. However, here are my thoughts, if you refinance, you change your loan terms (could be bad or good), and you lower your payment. Which always lower’s your interest rate deductions.
If you don’t you have all the interest to deduct on taxes possibly – possibly, I am not a tax adviser.
Maybe what you could consider is working with the current lender to see if they will modify your loan on the rate only to say 5.87%, with payment of a point to cover their time and paperwork? It’s always worth asking.
Add your own answer in the comments!
Talk to your loan officer and ask them this question. A good competent local loan officer will be a great help.
I am going to refinancing my house soon in a very similar situation. I have a 30 year loan at 6.375 and will be redoing it to a 30 year 5% or lower. The savings will be so substantial that the cost of the refinance will be paid back in less than three years. (I can’t remember exactly the figures this early in the morning).
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